Preamble

The House met at half-past Nine o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

Civil Rights (Disabled Persons) Bill

Mr. Harry Barnes: I have a petition in support of the Civil Rights (Disabled Persons) Bill.
As you will be aware, Madam Speaker, it was the hope of the supporters of the Bill that it would have been placed before the House today for its Report Stage and Third Reading, but, as a result of action that has been taken elsewhere throughout the House, and because of its procedures, it has been blocked.
I therefore have a petition, signed by several organisations, which organised itself in 24 hours, when it was finally discovered that the Bill had been stopped in Committee, or kept in Committee rather than being brought before the House.
The officers and officials of the organisations concerned represent the Muscular Dystrophy Group of Great Britain, MENCAP in Northern Ireland, Suffolk and Cambridgeshire and its northern division, Lambeth Accord, Artsline, Scope, the GRAEA Theatre Company, the Greater London Association of Disabled People, React, the Disability Alliance, the United Kingdom Coalition of People Living with HIV and AIDS, the NAZ Project, the Denholm Elliott Project, DART and the All Aboard Campaign, the Centre for the Study of Integrated Education, the Trades Union Congress, the Carers National Association, People First, the Royal Association for Disability and Rehabilitation, the Royal National Institute for the Deaf and the National Federation of the Blind of the United Kingdom.
The petition reads:
To the Honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled
The Humble Petition of the officers and officials of organisations of, and for, disabled people
Sheweth that the principles and provisions contained in the Civil Rights (Disàbled Persons) Bill, particularly its proposed strategic enforcement authority, the Disability Rights Commission, to provide practical assistance to those seeking redress and the establishment of legal precedents for others, represents a better means of moving towards equal rights for the United Kingdom's 6.5 million disabled people than the Government's alternative Disability Discrimination Bill
Wherefore your petitioners pray that your Honourable House will urge the Prime Minister, his Government and its supporters not to impede the passage of the Civil Rights (Disabled Persons) Bill
And your petitioners, as in duty, will ever pray etc.
It is signed by Sahra Ahmed and the representatives of the organisations I have mentioned.

To lie upon the Table.

Orders of the Day — Building Societies (Joint Account Holders) Bill

Clause 1

JOINT ACCOUNT HOLDERS

Lords amendment: No. 1, leave out clause 1 and insert the following new clause—

RIGHTS OF SECOND-NAMED JOINT SHAREHOLDERS

(".—(1) After section 102 of the Building Societies Act 1986 there shall be inserted the following section—

"Rights of second-named joint shareholders.
102A.—(1) This section applies where the terms of a transfer of business by a building society to the company which is to be its successor include such provision as is mentioned in section 100(1).

(2) If—

(a) a person ('A') held shares in the society throughout the requisite period;
(b) any shares in the society held by A were jointly held for any period ('the joint ownership period') constituting the whole or part of the requisite period;
(c) A was the second-named holder of the jointly held shares for the whole or part of the joint ownership period; and
(d) no person who has priority over A for the purposes of this section held shares in the society throughout the requisite period,

the jointly held shares shall be treated for the purposes of subsections (8) and (9) of section 100 as having been held by A alone.

(3) The following persons shall have priority over A for the purposes of this section, namely—

(a) where A was not the first-named holder of the jointly held shares for any part of the joint ownership period—

(i) any person who was the first-named holder of those shares for the whole or part of that period; and
(ii) where A was the second-named holder of those shares for part only of that period, any person who was the second-named holder of those shares for a later part of that period; and

(b) where A was the first-named holder of the jointly held shares for part of the joint ownership period, any person who was the first-named holder of those shares for a later part of that period.

(4) If a person dies during the requisite period at a time when he is named in the records of the society as a joint holder of any shares jointly held, this section shall have effect in relation to any later time as if he had never been so named.

(5) In this section—
'the first-named holder', in relation to any shares jointly held, means that one of the joint holders who is named first in the records of the society, that is to say, the person by whom alone, apart from this section, those shares would, by virtue of paragraph 7(5) of Schedule 2, be treated as held for the purposes of section 100;
'qualifying day' has the same meaning as in subsections (8) and (9) of section 100;
'the requisite period' means the period beginning two years before the end of the qualifying day and ending immediately before the vesting date;
'the second-named holder', in relation to any shares jointly held, means that one of the joint holders who is named second in the records of the society;
'the vesting date' has the same meaning as in section 100.


(2) In paragraph 7 (joint shareholders) of Schedule 2 to that Act (establishment, incorporation and constitution of building societies), after sub-paragraph (5) there shall be inserted the following sub-paragraph—
(5A) In its application to section 100, sub-paragraph (5) above shall have effect subject to the provisions of section 102A." ")

Mr. Douglas French: I beg to move, That this House doth agree with the Lords in the said amendment.
The first amendment gives the impression of being draconian. It introduces a new clause that replaces the whole of the original clause 1 of my Bill, which I introduced into the House on 17 January 1995. I emphasise that that is not a classic takeover operation. It reflects, rather, different schools of thought on drafting.
The Building Societies Act 1986 is an extremely complex piece of legislation. Tampering with one part causes repercussions elsewhere. Although the aim of my Bill was simple, the task of giving effect to it on paper was the reverse.
Therefore, although the principal clause, the new version of which we are debating first this morning, is drafted differently from the one that I placed before the House on 17 January, I emphasise that its legal effect is almost the same as that which I originally tried to achieve. There are a few tiny modifications, which I shall mention later.
That is important, because the House did me the honour of permitting my Bill to pass through all its stages on 10 February without debate. I therefore believe that the House might have had legitimate difficulty in accepting from the other place a Bill with amendments that substantially altered its effect. I am pleased to confirm that no such dilemma exists.
The central aim of my Bill and amendment No. 1 is to facilitate the payment of bonuses to second-named account holders when building societies are taken over or merge. Naturally, there is a current interest in the case of the Cheltenham and Gloucester building society. The Bill is also relevant to the proposed merger of the Halifax and Leeds building societies, and any other building society mergers or takeovers by banks that may happen in due course.
Under the Building Societies Act 1986, bonuses to savers with investment accounts can be made only to a sole account holder or to the first-named person of a joint account, and then only to those who have invested continuously for two years. I support, and do not seek to change, thé two-year requirement, which rewards loyalty for long-term saving. Their Lordships took the same view.
What I seek to change, and amendment No. 1 changes, is the restriction of bonus entitlement to first-named account holders only, which discriminates unfairly against several sorts of saver.
First, it is grossly unfair to widows who have had a joint account with their husbands. If the husband dies during the two-year qualifying period, the bonus dies with him, even though the same account may continue in the widow's name alone, with the husband's name deleted. It makes no difference how many years the wife has previously contributed to the account: she gets no credit for it. The two-year qualifying period has to begin all over again.
An example could be given in the case of the Cheltenham and Gloucester building society, where the qualifying two-year period is from December 1992 to December 1994. If a husband on the account—the first-named account holder—died during that period, the widow would be denied the bonus entitlement that she would otherwise have received had her husband lived.
Secondly, the 1986 Act is unfair to newly marrieds. A single woman with an investment account savings history that qualifies her for a bonus in her own right, will fail to qualify if, on marriage, she redesignates her account jointly in the name of her new husband and herself. Her new husband, as the new first-named account holder, must begin a two-year qualifying period in his name. His wife's savings history no longer counts.
Thirdly, the 1986 Act can be unfair to those who get divorced or separated.
Fourthly, there are cases in which it has proved unfair to couples where the husband's name was deliberately taken off a joint account for sensible tax-planning reasons, consequent upon the introduction of separate taxation. I could give the House instances of where that has been done on the specific advice and recommendation of a building society branch. That well-intentioned step, made during the two-year qualifying period for quite different reasons, can result in the account holder losing his or her bonus entitlement.
The new clause in amendment No. 1 can put right those injustices. I am bound to admit that it does so with greater certainty and precision than did my original clause.
In the original drafting, I had the benefit of advice from three extremely distinguished firms of solicitors. I should like to record my thanks and pay tribute to them. I shall, however, refrain from mentioning them by name. I do not believe that they would thank me for doing so as, in the event, their efforts turned out to be capable of improvement. I suspect that taking advice from three firms of solicitors simultaneously—heavyweight firms, at that—may be a temptation best resisted.

Mr. Bernard Jenkin: Does not my hon. Friend's experience suggest that, where two lawyers disagree, one might assume that one of them might be correct, but where three lawyers are in agreement, they are all bound to be wrong?

Mr. French: I think my hon. Friend makes an extremely good point, reminiscent of what is frequently said about economists—

Mr. Dennis Skinner: Especially when the three solicitors are in the Cabinet.

Mr. French: I do not agree with the hon. Gentleman's sedentary comment.
When the Bill was originally drafted, we turned first to the second schedule of the 1986 Act, which is where the provisions relating to joint account holders are to be found. We set about amending the schedule. In doing so, we produced, I freely confess, some unintended and unexpected results, including some risk that certain account holders might qualify for double entitlement. That was never our intention.
I shall illustrate how that happened by reference to the original sub-paragraph (5C). In the case of divorce, where the wife was the second-named account holder, if the two


of them opened separate accounts with the same building society, the wife would not qualify for a bonus, whereas, if the husband moved his account to a different building society, she would. Similarly, if the husband's name was taken off the joint account for some other reason, the wife would be entitled to a bonus if the husband had no other account with the society, but she would not if he did.
Clearly, that was not what was intended. That example is one of a number of reasons why we are now discussing a redrafted clause, and it shows why that redrafting was essential.
Parliamentary counsel wisely advised that, instead of amending the schedule, it was better to tackle the qualifications for cash and share distributions, as set out in section 100. There is little drafting that cannot be polished up by parliamentary counsel if they put their minds to it; and they did so in order to produce the new clause in amendment No. 1.
The amendment, which becomes new clause 1, consists of a new section, section 102A, to the 1986 Act, and replaces clause 1 as originally drafted. Subsection (2) sets out four conditions that a mythical person—whom we shall call A—has to meet before he or she can qualify for cash distribution. First, he or she must have met the two-year qualifying period. Secondly, he or she must have held a joint share account. Thirdly, he or she must have been the second named person on that account. Fourthly, and rather importantly, there must not be anyone with a prior claim over his or hers. That is why subsection (3) is needed.
If the first named account holder qualifies, it is important that the second named account holder should not qualify. It is not our intention that both should qualify. The first named takes priority over the second named, but, in the case of a widow, there is no first named, and the second named therefore qualifies.
Subsection (3) sets out cases where another account holder has priority—where there is a prior claim over the bonus. Subsection 3(a) covers the situation where the mythical person A has never been the first named holder of jointly held shares. In the first example, she marries, she closes her account and opens a joint one on which her husband is the first named account holder. He then has priority over her. If he meets the qualifying period, he receives the bonus, but if he does not, she receives it. That avoids them qualifying twice, but ensures that one of them qualifies on behalf of their joint ownership of the account, which is what has always been intended.

Mr. Alan Duncan: My hon. Friend's logic is absolutely impeccable, and I have been following it step by step. Are there circumstances in which there may be more than two account holders, and what would happen in that event?

Mr. French: The Bill does not provide for circumstances where there are more than two account holders. I originally decided to address the subject of second named account holders, and the Bill's limitations are set by its long title. Ideally, I should also like to address the position of third, fourth, fifth and subsequent named account holders. However, that would require a more broadly drawn long titlé.
In so doing, many complex issues that a small Bill of this type could not reasonably tackle would have come into consideration. The almost certain result would have

been that, because the Bill had been cast too widely, the House would not have felt able to give it the fairly speedy passage that it has enjoyed so far.

Mr. Quentin Davies: I am grateful to my hon. Friend for giving way, and I thank him for his interesting explanation of the point raised by my hon. Friend the Member for Rutland and Melton (Mr. Duncan).
My hon. Friend the Member for Gloucester (Mr. French) has obviously become an expert in the field, and he will have thought through the different aspects of the Bill very carefully during its long and successful passage through both Houses. Can he therefore inform the House to what extent he thinks that practical injustices and problems will be created by the Bill's failure to cover the theoretical existence of third, fourth and subsequent account holders?
What kind of family or other circumstances does he envisage may arise whereby third, fourth and subsequent account holders may have an equity interest in the account which ought to be recognised in the event of the acquisition of a building society but, as a result of the restrictive scope of the Bill which my hon. Friend has explained, would not be enfranchised as a result of the legislation's passage into law?

Mr. French: My hon. Friend makes a very important point, which I shall approach from a different direction. A significant number of people will benefit if the House approves the Bill's passage, including a substantial percentage of those who are currently excluded under its provisions.
The number who will not benefit because of the example given of third and subsequent account holders is very small. I fully accept that there is an element of unfairness in such cases, many of which have come to my attention. However, I argue that the Bill deals with the overwhelming number of injustices. I should have liked to see the very small number of remaining cases dealt with as well, but in the circumstances that does not seem to be a practical proposition.
My hon. Friend the Member for Rutland and Melton (Mr. Duncan) has asked for examples of cases in which third, fourth and fifth named account holders could suffer. For example, if an account had six named account holders and, for whatever reason, the first three names were removed, the account would not qualify for a bonus.
There are many variations of that example, and I could provide my hon. Friend with letters explaining them. However, in reality, the number of people involved is very small. When my hon. Friend the Minister of State introduces a more broad-ranging review of building societies—he has announced that that is his intention in due course—we will have the opportunity to address the remaining anomalies, of which the case of the third, fourth and fifth account holders is one, at that stage.

Mr. Anthony Coombs: Many hon. Members are relying on the Library's excellent brief which explains the effect of the Bill. On page 16, it says that, on Report in another place, Lord Inglewood addressed the case of multiple accounts, particularly where an account is held by a mother, father and a child, and where both parents die. Lord Henley also referred to that case when he introduced the amendments to which


we are now referring. For purposes of clarification, will my hon. Friend explain how the Bill as it is presently drafted will deal with that situation?

Mr. French: I propose to address that question a little later. That is the closest that the Bill gets to dealing with the position of someone who might be interpreted as a third named account holder. A clause was introduced in the House of Lords to deal with the subject of orphans. For example, if a mother and father die in an accident, the position of a child who may be named on the same account will then be brought forward to take the place of the first two account holders whose names have been removed. I shall address that one exception a little later in my speech.

Mr. Quentin Davies: I am grateful to my hon. Friend for giving way again, and I am very glad that his Bill addresses the case of orphans. That is obviously a rather dramatic example of an injustice that may have been created if the Bill had not addressed that sad eventuality.
I put to my hon. Friend another case, which I think that he will agree is not entirely theoretical, where an injustice might be created. If six people decided to open a joint account for some common purpose, perhaps in connection with a society or association—

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): Order. The Chair finds it very difficult to hear the hon. Member for Stamford and Spalding (Mr. Davies) when he faces away from the Chair. His remarks are not catching the microphone and it is very difficult to hear what he is saying. I ask the hon. Gentleman to face the Chair.

Mr. Davies: I apologise, Mr. Deputy Speaker.
I was putting a case to my hon. Friend which I think he will agree should be examined, because it could arise in practice. A group of people—half a dozen, 10 or perhaps more—may decide to open a joint account with a building society for some common purpose, perhaps in connection with an association, club or some other venture in which they are involved.
As I understand my hon. Friend's legislation, if the building society where that account was opened is the subject of a bid, only the first named account holder would benefit from the bonus for the recognition of equity interest that that account represents. It may be a coincidence as to which of the individuals involved in that joint account—

Mr. Deputy Speaker: Order. I did not call the hon. Member for Stamford and Spalding to make a speech; I called him to make an intervention.

Mr. French: I shall respond to my hon. Friend's query in so far as I understand it. In that case, the account would qualify for the bonus entitlement via the second named account holder.

Mr. Davies: But not the third or subsequent account holders?

Mr. French: The account itself would qualify, and, if it is a joint account, it is right that all the account holders should receive one bonus which is shared among them.

Mr. Davies: Will my hon. Friend give way?

Mr. French: I think that I should make some progress.
I turn to subsection (3)(b), which covers the case where a wife may have been the first named account holder for part of the period of the joint account. For example, a

wife and a husband may change the order in which the names appear on the account—Mr. and Mrs. could become Mrs. and Mr.; but it is more likely that John and Joan would become Joan and John. Therefore, both will have been the second named account holder at some stage.
In that case, the subsection provides that the one who is the first named holder for the later part of the period will have priority. However, if the later first named holder has not held shares for the two-year qualifying period and the second named holder has, the latter would benefit.
Subsection 4 is a provision that was added to the original Bill on Report in the House of Lords in response to suggestions made by Lord Eatwell. It is the provision relating to orphans that my hon. Friend mentioned a moment ago, and I welcome it. For the sake of clarity I shall briefly explain the background again.
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The measure deals with cases of multiple accounts held by a mother, a father and a child. When both parents die—it is deliberately limited to circumstances of death alone—the child account holder moves up to fill the space, and is allotted a position as if he or she had been the second named account holder. Effectively, it regards the two parents as one account holder and the child as the second named account holder, although the child's name may appear third. For that reason, in those circumstances, the account qualifies for distribution.
Hon. Members will realise from that that there are many variations and permutations, and I do not want to trouble the House with any more of them. Those who enjoy the minutiae will find much to savour in the speech of Lord Henley, in column 915 of the Lords Hansard of 15 March. Indeed, there was a suggestion that his Lordship's speech should become a schedule to the Bill. I have drawn on it fairly heavily, although I suspect that it is not necessary for it to become a schedule. However, it is there to be read, and I am grateful to those who drafted it for bringing clarity to what the House can see is a complex matter.

Mr. Nigel Evans: If three people held the same account—mum, dad and a son—and the mother and father separated and then the mother, for whatever reason, died, would the son automatically become the first named account holder?

Mr. French: I think that in that case, if I understand the facts correctly—I would be happy for others to put their thinking caps on, because we are dealing with highly technical issues—the son would qualify in those circumstances if the father did not. I believe that that is right, but it is worth spending some time on such matters. Perhaps the Minister of State may wish to turn his attention to such examples when he speaks to us later.
I am deeply conscious that neither the new clause nor my original Bill attempts to cover every anomaly. Some have been mentioned, and in all fairness I should mention a few of the others. Obviously, the Bill does not cover cases in which there has been no continuity of saving through the two years. I never believed that it should do that, because the two-year requirement recognises loyalty, which is a sound principle.
Borrowers are not covered, either—that is a whole debate on its own, in which I suggest the House should not become involved today, if it wishes to complete


proceedings on the Bill. The Bill does not cover personal representatives of deceased account holders, other than in the examples that have been mentioned.

Mr. Duncan: It strikes me that this is primary legislation designed to overcome a simple case of unfairness arising from the peculiar circumstances of a merger of building societies in my hon. Friend's constituency. As some instances are not covered by the new clause—inevitably so—does my hon. Friend think that the work of the building societies ombudsman, who was authorised by the 1986 Act which my hon. Friend's Bill would amend, could be enlarged so that his decisions could in future include the individual cases not covered by the Bill?

Mr. Alistair Darling: On a point of order, Mr. Deputy Speaker. I may be doing Conservative Members an injustice, but I detect a whiff of a filibuster. Although the Government have restored the Conservative Whip to the hon. Member for Billericay (Mrs. Gorman), I gather that they are anxious not to hear her speak later.
My point of order arises from the fact that we are discussing building societies, while the Minister of State, Treasury, who is responsible for the regulation of building societies, is here. If the Government want to discuss building societies at length, and perhaps the ombudsman as well, would it be in order for the Minister to make a. statement on the Office of Fair Trading report on endowment mortgage sales that was published today?
Perhaps the hon. Gentleman would say whether he agrees with our call for an inquiry by the Personal Investment Authority, and for full regulation of the sale of mortgage business? The House would be better employed discussing issues of concern to the public and to those who may have been mis-sold endowment mortgages, rather than engaging in a filibuster to prevent the hon. Member for Billericay from speaking later.

Mr. Deputy Speaker: It is up to the Minister to decide whether to make a statement, and then it would be up to the Chair to decide whether it was in order. So far, the debate has been in order, and if it ever gets near being out of order, I can assure the hon. Gentleman that it will be ruled out of order.

Mr. French: I am grateful to you, Mr. Deputy Speaker. We are dealing with complex matters, and as the House did not have the opportunity to debate them on Second Reading, I felt that it was right to go through the new clause and explain its effect. Perhaps I have been more indulgent 'than I should have been in accepting interventions, but if I may now proceed, I shall finish what I have to say on the new clause.
The point that I was endeavouring to emphasise is that a reasonable balance has to be struck to focus upon the worst injustices with a reasonable expectation of success. That appeared to me to be a more attractive proposition than trying to put right every injustice related to building societies, and then failing altogether. My aim has always been limited.
The substantial correspondence that I have received, and the cases drawn to my attention by people throughout the country, lead me to believe that I have struck the balance appropriately. I leave the remaining injustices to be tackled in more comprehensive legislation at a later

stage. If the Bill had been too wide-ranging, we would probably not be debating it today; it would not have 'got as far as it has.
At this stage, I remind the House of what Lord Hayhoe, who piloted the Bill so ably through the other place, said. He wisely and prudently advised that to introduce more complexities could have placed the entire passage of the Bill in jeopardy. That view was confirmed by Lord Henley, to whom I am grateful for having introduced the amendment, and amendment No. 2, which we shall debate next. Their Lordships agreed with the good sense behind that approach, and I believe that they were right.
The passage of the Bill, and of the clause which lies at its heart, have been followed closely in the country. The British like fair play, and the Bill seeks to deliver it. I have a particular interest in fair play for the widows in my constituency who save with the Cheltenham and Gloucester building society. If the clause and the Bill are accepted, some of them will receive substantial sums, ranging from £500 to many thousands of pounds, under the terms of the Lloyds bank takeover of that building society. The House should be clear that those widows will not get the money if the House does not approve the Bill today. They will be direct beneficiaries of the legislation.
The Bill's scope does not stop at the Cheltenham and Gloucester building society: it will also help members of the Halifax and the Leeds Permanent building societies, which have announced plans to convert to a bank after they have merged. Those societies have said that they will take advantage of the measure to give shares to second named joint account holders.
In that context, perhaps I should declare an interest as a small saver with the Halifax and the Leeds, although I emphasise that I am not one whose position would be changed by the Bill.
I must give other categories of hopeful recipients something of a warning. The Bill is permissive, not mandatory. It makes it lawful to distribute bonuses, but does not compel building societies to do so. One cannot know what other building societies may decide to do in the future.
As for the Cheltenham and Gloucester, its transfer document confirmed that it would include widows in its distribution if the law permitted it to do that; but the transfer document makes no mention, and therefore would appear to have no intention, of including the other categories that this Bill will make lawful. That is, of course, a matter entirely for the boards of Lloyds bank and the Cheltenham and Gloucester to decide. One has to assume that they had their reasons for excluding newly-weds, divorcees and separate taxation people. One can only speculate on what those reasons are, but I wish to record my disappointment with their approach.
One 1 February 1995, the Cheltenham and Gloucester announced that Lloyds bank had set aside £10 million, to be made available to second named account holders. Speaking in another place on 27 February, Lord Dubs—

Mr. Deputy Speaker: Order. The hon. Gentleman must not quote from the Lords Hansard, unless he wants to quote a ministerial statement.

Mr. French: The noble Lord's point was that he hoped that the Cheltenham and Gloucester intended to include all second named account holders, not just widows.
By the time of the publication of the transfer document, the sum of £10 million had risen to £25 million, in recognition of the realistic approach that the C and G was taking to its responsibilities which might arise under the new legislation. But, sad to say, the restriction confining the society to cases of death only remained firmly stated.
As this debate and the one that follows it will deal with the improvements which, I submit, their Lordships made to the Bill, and since I know that proceedings in this House on Fridays can be rather peculiar at times, perhaps this would be the right time to place on record my thanks to Lord Hayhoe for piloting the Bill so ably through the Lords. I also record my thanks to Lord Henley, who tabled the amendments and explained them clearly and comprehensively. It was especially gratifying to find that, at all stages, support for the Bill in another place came from all parties.
Before concluding, I should also like to record my thanks to Lord Dubs, who introduced a similar Bill in another place in January, but who kindly withdrew it to support mine. We both had the same idea independently at the same time, and I am grateful for his support.
I should like especially to thank the Minister of State, Treasury, and his team of advisers. He will introduce his own comprehensive measures relating to building societies in due course, but he has been extremely supportive and helpful to me in assisting the Bill to make the progress that it has made.
I am also grateful to representatives of the Building Societies Commission, especially Commissioner Geoffrey Fitchew and Terry Matthews, who has been enormously helpful. I also record my thanks to Ron Armstrong of the Building Societies Association; he, too, has been most helpful.
Most of all I should like to thank the hundreds of people who wrote to me, sometimes supporting the broad principles in the Bill, sometimes setting out their own circumstances. The letters took a great deal of reading and replying to, but they were all interesting. If the House gives its approval to the Bill, I hope that, in some small measure, that will represent a response to the many people who wrote to me and who will benefit. This has been a team effort, to which I hope the House will this morning give its final approval.

Mr. Quentin Davies: I congratulate my hon. Friend the Member for Gloucester (Mr. French) on his initiative. I was pleased and proud to be associated with it as one of the original sponsors of the Bill. I congratulate him on his success in bringing it this far, and on the great expertise and astuteness with which he has steered it through.
This Bill goes to the heart of the notion of equity interest in a co-operative or mutualised venture. It is perhaps rather unfortunate in this country that we have limited our consideration of this principle—an important one—to building societies, because they are only one type of co-operative venture. Indeed, they are only one possible type of mutual bank.
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Unlike many other countries, in this country we do not have provision for mutual banks—apart from building societies. That is an unfortunate distortion and restriction in the framework within which deposit-taking institutions

exist here. In the rest of the European Union, there are substantial mutual banks. Crédit Agricole is a mutual bank—a building society writ large—and is one of the largest deposit-taking institutions in the world.
The essential principle at which the Bill is directed is whether someone who opens an account at a deposit-taking institution which is a mutual institution, not a joint-stock company, has the equivalent of an equity interest in that business. My hon. Friend's Bill came into being to deal with what happens when someone acquires such a business and, naturally, wishes to make a payment to acquire the equity interest in that building society.
Then, to what extent and on what principles should the cash sum that that person pays over to acquire the equity interest be distributed between the customers or depositors of the mutually owned institution? In this case, we are talking about a building society, but I think that we can agree that this is the heart of the matter.
One aspect concerns what happens when there is more than one account holder. To what extent can we say that all the account holders have an equity interest? Logically, I should have thought that they all do. There is considerable artificiality in starting by looking at the first account holder and then extending the definition—in line with the terms of the Bill—so that, in certain circumstances and conditions, subsequent account holders can be taken into consideration. In certain very limited circumstances, such as those of the orphan about which we heard this morning, the third account holder can have his equity interest recognised—but no other account holder can.
Earlier, I asked my hon. Friend the Member for Gloucester a question which I believe was pertinent: what happens when several people come together to open a joint account in a building society? They may do that for any number of purposes—we do not need to go into them, because we live in a free society, in which it is quite natural that people should come together for some collective purpose.
Many collective purposes involve opening bank accounts, so there may be an account with a mutual bank or building society under a large number of names-10, 20, 200 or possibly even 2,000, at least theoretically. In those circumstances, only the first named account holder would be recognised as having an equity interest, and would receive a sum in consideration of that interest in the event that someone acquired the equity of the whole building society. I think that I properly understand the purpose and sense of the Bill before us.
The person who happens to be the first named account holder does not necessarily have a greater interest than the other account holders. The first named account holder might be there because he put down his name first or was the founder of the particular association, group or enterprise which caused the account to be opened. Perhaps his name starts with the letter A, and it was simply convenient to list the account holders in alphabetical order.
I think that my hon. Friend might be about to tell me that the answer is that the first named account holder would in such circumstances be compelled to account for any bonus received by way of transfer equity interest to the other account holders.

Mr. French: If I may say so, my hon. Friend is putting the position in a rather artificial way. The bonus


entitlement does not get credited to the first named account holder as an individual but to the account. The eligibility for the bonus is determined by the position of the first named account holder, or, in the case of the Bill, the second named account holder.

Mr. Davies: Indeed, but if for some reason the first named account holder is not in a position to collect the bonus, all the other account holders would lose the entitlement to it, as I understand it, except in the narrowly defined circumstance when the second named account holder is a widow, or in the other circumstances that are foreseen in the Bill.
A separate point, perhaps, is the entitlement to equity in a building society. That raises wide issues—perhaps we should look at them in another context—which arise naturally out of our consideration of the Bill. We have already heard that the Bill is permissive. It does not establish what the rules are for recognition of equity interest by customers or depositors of building societies.
The Bill does not establish what rules have to be adopted on that matter by all building societies or mutual banks in this country. It simply permits building societies to extend the rules for recognising second, or subsequent, account holders, in very limited circumstances, as entitled to that equity.
I support the Bill. Indeed, as I have said, I was pleased and proud to be a sponsor of it, but we must recognise—I hope that it will complete its passage through the House this morning—that we have really only just begun to touch the very edge of this important issue. Everybody in this country, when establishing a relationship with a mutual bank or building society, whether as a borrower or lender, should know ab initio precisely what are the rules of the game, to what extent he or she is merely becoming a borrowing customer or depositor, and to what extent he or she is taking an equity interest in that particular bank or building society.
If the rules are different from one building society to another, that is far from ideal. That is known in technical parlance as an informational problem. It is extremely difficult for the ordinary unsophisticated customer to know, when he is offered 5.75 per cent. on his deposit by the Halifax and 5.3 per cent. for the same term and on the same conditions by the Nationwide, the Cheltenham and Gloucester, the Swindon, or whatever. The equity interest that he or she is acquiring by placing a deposit on particular terms may be different in different societies.
It is possible to brief a lawyer to advise whenever one makes a deposit or gets a loan from a building society. Indeed, if one has the enviable financial resources that my hon. Friend possesses, one might even ask three lawyers to give an opinion on that subject—and no doubt get three different opinions as a result. That is not really a desirable situation for the ordinary citizen of this country who wishes to make a deposit.
It would be ideal if it were plain beyond peradventure precisely how one creates an equity interest in a mutual bank or building society; what activity and under what conditions and terms creates that equity interest; and what activity or relationship with those institutions does not create that equity interest. In that case, the Bill would not be necessary, because it would be defined in advance exactly who had an equity interest.
A shared equity interest would be exactly the same as if a share is held in joint names—something with which company law has been familiar in this country for many centuries. As far as I know, no problems, ambiguities or informational gaps exist in that field. That would be a great improvement in the law.
Perhaps my hon. Friend the Minister of State will tell us later that we cannot go that far, for whatever reason, and that what I have outlined would be a rather prescriptive and sweeping form of legislation. If we cannot go that far, the next best thing would be that every building society—I imagine that this could be done simply by secondary legislation or by the kind of rules that my hon. Friend the Minister of State can simply promulgate—should be compelled to hand over to any potential depositor or borrower a clear set of rules setting out precisely at the beginning what rights are being created when a business relationship is started between any citizen and a mutual bank or building society. That is a slightly different position, in which the rules of the different societies remain different.
I suppose that one can say that we should not be too prescriptive in a free society. We should allow mutual organisations to be established on different principles and according to different rules. I find that argument, in many ways, seductive, although it conflicts with the earlier argument that I was making. At least it would be clear beyond peradventure, when somebody enters into a business relationship with a building society, whether an equity interest is being created, how it will be recognised, and, indeed, what it will be worth.
That brings me to my next point: there is an unfortunate degree of confusion at present. There is regrettable obscurity about how one evaluates those equity interests. We are spending a lot of time this morning deciding whether first or second named account holders, whether they are widows, orphans and so forth, should be recognised as having an equity interest in the event that a building society is taken over. We have already agreed in the House that that is an important matter that must be looked at carefully and deliberated thoroughly, which we are doing as a result of the initiative of my hon. Friend the Member for Gloucester.
All that is academic if we do not understand exactly how an equity interest is to be quantified. What is the principle on which it is to be determined? What level of bonus is to be shared out, and on what principle, to the various deposit holders or borrowers in a building society in the event that it is taken over?
It is all very well telling our constituents—those who hold joint accounts, perhaps husband and wife or the other eventualities that we have discussed—that they can rest assured that, in the event of a takeover of their society, both named account holders will stand to benefit, but what really matters to them, if they have a £2,000 deposit, is whether that means that they are likely to get £20 or £200.

Mr. Deputy Speaker: Order. I have been tolerant of the hon. Gentleman, but he is going rather wide of the debate. He must bring himself back to it. He knows the point I am making. The debate is not about all building societies or about what should be done in the future. We are debating the Bill in front of us.

Mr. Davies: I have the highest regard, Mr. Deputy Speaker—accumulated over the years I have been in this


House—for your judgment in these matters. I stand very much corrected, and I shall try to narrow the focus of my comments.
I have set out the broad lines of the three main points that I wanted to make. I hope that my hon. Friend the Member for Gloucester agrees that one of the valuable results of his initiative in bringing the Bill before the House has been our consideration of the whole area relating to the rules affecting building societies, the framework within which individuals conduct their business with building societies and the extent to which the notion of equity in building societies or mutual companies is recognised in law.
That area will now receive the attention it deserves as a consequence of it having been discussed both here and in the other place. It will be difficult to forget about it now, in the way that we have done for a number of years.
10.30 am
The debates on the new clause, both here and in the other place, represent several good days work by Parliament. We began with the initiative of my hon. Friend the Member for Gloucester, which I much admire. He took outside legal advice from his three law firms. I hope that he and his family remain solvent and that generations of his descendants will not labour under the burden of the enormous liabilities that may have been incurred to pay for the quite awesome degree of professional advice. However, the fact that my hon. Friend was prepared to do that in the interests of better legislation counts enormously in his favour.
However, not content with that, we have also had the benefit of the expertise of many other people—for example, the noble Lords in the other place, parliamentary draftsmen, a Treasury Minister and various officials. We feel a sense of awe when we think of the intelligence that has been mobilised and focused on the text before us. When I rose modestly to my feet today to make a few general comments on the issues raised by the Bill, I found myself somewhat intimidated in taking on such an enormous corpus of wisdom.
The Bill has been carefully and thoroughly considered, and I hope that it proceeds to Royal Assent without delay.

Several hon. Members: rose—

Mr. Deputy Speaker: Order. Before I call the next speaker, I warn hon. Members that they must stick to the amendment we are considering, or my patience will become insolvent.

Mr. James Clappison: I shall certainly follow your stricture, Mr. Deputy Speaker.
I welcome the opportunity to make a brief contribution to the debate. Some of what I wanted to say has been covered already and my concerns have been allayed. Nevertheless, it is worth spending some time examining the provisions relating to joint account holders. The Bill went through its stages in this House very rapidly. It then went to the other place, where it received quite radical surgery. It is a technical Bill with drafting complications. Therefore, it is worth taking time to examine the way in which it would remedy injustices.
The time spent examining the Bill in another place was well worth while. It would have been a shame if the debate there had been foreshortened because it produced this important new clause, and in particular subsection (4), which will assist orphans and others in particular circumstances.
It would be churlish of me not to congratulate my hon. Friend the Member for Gloucester (Mr. French) on the Bill. It is an important and worthwhile measure. It is a good example of how private Member's legislation can pass through the House, remedy injustices and help a number of people. As my hon. Friend said, it will assist many widows in particular, often at a time in their lives when they may be short of money and needing assistance.
We need to consider whether other injustices might arise. As I have said, the Bill presented considerable drafting difficulties. I want to make two points. The first and obvious one—although it is not my main point—is the definition in new section 102A(2) of "requisite period", which is set at two years. I appreciate that the purpose of the distributions is to reward loyalty and, as an important part of policy, to prevent the destabilising flow of funds between financial institutions and building societies on the basis of market rumours. I well recognise the importance of that, but is it really absolutely necessary to provide for a period as long as two years? By the time two years has passed, any market rumour will have been lost in history. In this day of electronic communications, rumours pass very quickly.
I am aware that my hon. Friend the Minister of State is conducting a review of building societies. Will he consider whether the two-years provision is necessary? I understand that a line must be drawn somewhere, but the provision might create an injustice for someone who has taken out an account for perfectly proper reasons—taking a long-term view, rather than on the basis of any rumour—within the two-year period. Would not such a person feel aggrieved at being excluded from any distribution?

Mr. Anthony Coombs: My hon. Friend touches on an interesting point that was raised by my hon. Friend the Member for Stamford and Spalding (Mr. Davies). It is difficult to quantify exactly what is an equity interest in a mutual society or company. It is possible that, 18 months before the merger or takeover, somebody might have deposited a large amount of money in a mutual society as a share account holder, but he would not be rewarded, whereas someone putting in a nominal amount of money, who could therefore be said to have less of a quantifiable stake, would benefit.

Mr. Clappison: I am grateful to my hon. Friend for his comments, which add force to my point. It is an example of how someone who is a serious, long-term investor in a society could lose out.
Although the new clause remedies the problem of orphans, concern remains about the position of married women and divorcees. I want to give the House an example of that, which was also touched on by my hon. Friend the Member for Gloucester. It is clear that we need to read subsections (2) and (3) together to judge their effect in a particular case. My reading of them may be wrong—I am often wrong—but in this case I take some consolation from the fact that the issue has taxed very much better legal brains than mine, in very eminent firms of solicitors. I want to explore, in a brief example, the


effect of the two subsections on marriage and divorce. If a woman is an account holder in a building society and marries, she will create a joint account with her husband. It is a common-place point, but I suspect that that is the way in which the overwhelming majority of the population will create a joint account—as Mr. and Mrs.
Under the amendments, the wife would—to begin with at least—remain entitled to a distribution for two years. Although her husband would be the first-named account holder, he would not qualify until the account had been in joint names for the full two years. That is how I interpret the effect of new section 102A(2)(d).
Under new section 102A(3), the husband would have priority, but he would need to have held the shares for the full period of two years. After two years, he would qualify under paragraph (d) as the person entitled to a distribution, and he would take precedence over his wife, even if she had been the original account holder and had decided, after marriage, to put the account into joint names.
My argument may imply a comment on relations between the sexes, but as long as they remained married a problem would not arise because of their joint arrangements.
My concern involves the effects of divorce on the arrangement under the clauses. The position that I have described may be fairly common. After two years of marriage, divorce may take place. Under subsections (2), and (3), if the couple divorce and split the joint account the husband remains the account holder. As he has held the account for more than two years, he would clearly qualify as the first-named account holder. He would therefore be entitled to any distribution that might take place. A potential injustice exists. As long as he maintains his account with the building society, the wife will not benefit from any distribution, however long she holds the account, or however much longer she held her account at the building society than her former partner.
Under subsections (2) and (3), the only way in which the wife would benefit from a distribution would be if the husband decided to close his account with the building society and take his money elsewhere. She would then become the joint account holder and would be entitled to receive a distribution. That seems to leave the matter, at least as far as the wife is concerned, if not in the lap of the Gods, entirely at the discretion of her husband's decisions. Why should that be? Why should not the wife have a moral entitlement to receive the distribution as the longer account holder? Why should she be put at a disadvantage merely, first, because she placed the account in joint names, in which her husband comes first, as so often happens, and, secondly, as a result of her husband's decisions after divorce? The amendments leave a potential injustice at large.
10.45 pm
I listened carefully to the excellent exposition of the Bill given by my hon. Friend the Member for Gloucester. I accept his explanation about the amendments and about the way in which they came to be drafted. As always happens with such legislation, the more one spreads the net in trying to remedy injustices and prevent potential injustices, the more complications and situations arise. Those who seek to remedy injustices eventually must seek to remedy just some of the injustices, and they may leave further injustices at large.
A problem still exists in relation to divorce. I invite my hon. Friend the Minister to consider that carefully. I know that he is conducting a review of the Building Societies Act 1986. The problem is well worth considering. I do not see why divorced women should, potentially, be put at a disadvantage by the clauses. I wonder whether some other way exists of dealing with the question of distributions, perhaps taking a radically different approach from that proposed in the amendments and going much further towards a recognition of shares.
Obviously, one cannot give people more than one entitlement through an account—that would be unfair to all other account holders. A way must exist of dividing the account to prevent the injustices that I have outlined and other potential problems.
That is the reservation that came to mind after I carefully considered the amendments. It is difficult to draft a Bill such as this and to effect the worthy intention of my hon. Friend the Member for Gloucester, but a better way could be found, perhaps by better legal brains than mine, to deal with the matter so that we remedy potential injustices comprehensively. That should concern the House and is well worth considering.
Otherwise, I warmly welcome the amendments. As I have said already, they will remedy the injustice faced by widows, which is probably the most common injustice arising from the Building Societies Act. It is salutary to think that, I believe, 3 million widows live in this country and that 500 women are widowed every day. A large number of them will hold building society accounts; quite a lot of them will benefit from the Bill because they have been widowed within the past two years. The amendments will do a good job of remedying injustice for many people. My hon. Friend deserves warm congratulations on introducing the Bill.

Mr. Piers Merchant: I should start by declaring a minor interest: I hold a small amount of money in a Halifax building society account. As the Halifax is merging with the Leeds building society, I hope that I might benefit by a small sum. Needless to say, the Bill and the amendments from the other place will not benefit me or alter that position.
I congratulate my hon. Friend the Member for Gloucester (Mr. French) on introducing the Bill under the ten-minute rule procedure. It was apparent that something needed to be done to right what had clearly been an injustice. It is a shame that we did not have an earlier opportunity to debate the Bill in this place, even though a fairly full debate has taken place in another place.
It is disgraceful that no Liberal Democrat Members are here today, bearing in mind the fact that the impact of present provision is felt by members of the public throughout the country and in all constituencies. It is important for the benefit of those people and for the many who may be affected by future building society mergers and changes of ownership that the law should be amended. For that reason, I strongly support the Lords amendments and the Bill.
I should like not only to support the amendments but to raise some questions on the clauses that cause me a little concern. I do not wish to frustrate the passage of the Bill, because it will put right the problems to which I have referred and which have become apparent only recently.
It is worth noting that those problems were caused, as my hon. Friend the Member for Hertsmere (Mr. Clappison) so ably explained, by the artificial limit enshrined in the Building Societies Act 1986—the arbitrary two-year period. In other words, the deregulation proposed in the new clause will solve a problem caused by regulation in the first place.
Although I do not want to discuss the two-year limit in depth, it is relevant to the Bill. Its ostensible purpose was to prevent funds from being moved around in anticipation of takeovers. If such a legal requirement was binding on equity transfers in the stock market it would create a ludicrous situation and would totally change existing processes. Why such a limit, which is far too long, should apply to building societies completely escapes me. To suggest that "rumours", two years before a potential takeover might influence investing habits is difficult to accept in practice. That theory bears no resemblance to reality.
I first learnt about the impact of the 1986 Act when I received a letter towards the end of last year from Mr. Mahoney, of Village way, Beckenham, a certified accountant. He enclosed a letter that he had written to the Cheltenham and Gloucester building society as a result of its takeover by Lloyds bank. It aptly describes the difficulties that the new clause is designed to correct. He. wrote of the different criteria that applied:
Is this fair in husband and wife cases, where there has been support for the Society for many years and unfortunately the husband dies—as opposed to the wife dying? You would give with one hand now and take it back at the worst possible time.
How will a widow feel towards the Society if she is cruelly denied the expected 'cash payment', and, moreover, how do I plan for my other clients where the husband may be unwell and may not live until completion day?
That professional cited a real problem created by the 1986 Act. My hon. Friend the Member for Gloucester introduced his Bill to remedy such problems.
I took up that case with the Minister of State, Treasury, who wrote back in less co-operative terms than are now apparent from the Treasury and said:
For the reasons I have set out, we have decided that the controls on takeovers imposed by Parliament in 1986 should remain in place.
I am glad to note that the Government have since realised that there is an urgent need to improve matters. I am glad that they support the Bill.
The background to the need for the Bill is the rapidly changing circumstances affecting building societies. There was a time when one was hardly aware of changes in the ownership of building societies. If such changes took place, they were often the result of quiet mergers between small and larger building societies. That pattern started to change with the flotation of the Abbey National. Since then, two major changes have taken place—the takeover of the C and G by Lloyds and the proposed merger between the Halifax and the Leeds building societies. There seems little doubt that that changing pattern in the operation and ownership of building societies will continue. The difference between building societies and banks is now so blurred as almost to eliminate that distinction in the foreseeable future. The law must now address the fact that many more takeovers

and changes in ownership will occur in the future. The 1986 Act is therefore now anomalous because it has failed to match reality.
The new clause specifically recognises reality by protecting second account holders. The existing law discriminates against women in particular. I am sure that it does so through default and that that was not the intention of the 1986 Act. That discrimination may have arisen just because of the convention for the man's name to appear first in joint accounts held by married couples. It is purely a clerical device, yet it has caused legal complexities. It is right to end that active discrimination against women, as set out in the 1986 Act, as urgently as possible.
As I have already demonstrated, the 1986 Act allows for specific. practical discrimination against widows—that group in the population who are in most need of support. The account that falls to them might be their only major asset on which they are relying absolutely. The proceeds of the joint account may become more significant to the widow than they did before her husband's death. Such an account is often more important to widows than other accounts are to most of their holders, not least because, apart from all the emotional trauma of widowhood, women often face financial hardship as well. It is grossly unfair for that group of people, of all groups, to be discriminated against. I am glad that the new clause will correct that.
My hon. Friend the Member for Hertsmere quoted examples of problems that have arisen because of divorce. Problems also arise when a newly wed couple separate after two years. A single woman may have held an account at a building society for many years. On marriage, she may decide, for convenience, to put that account in joint names. Should that marriage unfortunately fail and should that woman seek to revert to being a single account holder, she will find that, under existing law—and even, I fear, under the new clause—she will suffer discrimination, should her former husband maintain his account at the building society. That woman may have held that account with the building society for many years in her own name, but by virtue of that sudden change in the title of the account, through marriage, she will, on separation, lose all her rights. My hon. Friend the Member for Hertsmere did the House a service when he drew attention to the problems for women who lose their rights as a result of separation or divorce. I hope that a device will be found to rectify that problem before too long.
Although the new clause gives building societies the power to act differently and to pay out in the cases that I have described, particularly to widows, I regret that that is not a duty on them. The final choice is still left with the building societies. When my hon. Friend the Member for Gloucester referred to the C and G takeover, which was the impetus behind his Bill, he said how, originally, that building society demonstrated a willingness to pay out to all those people to whom the law could enable it to do so. It encouraged a change in the law, so my hon. Friend felt that it would be pleased with the proposed new clause. He then said how the C and G was beginning to step back from meeting that guarantee.
I received a letter from Mr. Evans, the divisional manager of C and G, who had written to Mr. Mahoney. He said:
C and G shares your views on the 'unfairness' of the situation where a first-named joint account holder dies.


Later, and somewhat erroneously, the letter continues:
The situation is regrettable, but must have been the Government's intention when passing the Building Societies Act. It is not the fault of C and G.
It is true that the situation is not the fault of C and G, but I am not so sure that it was the Government's intention when the Act was passed. The problem is more a consequence of other intentions in that Act.
The letter continues:
Unfortunately, there appears little that C and G can do about this situation and I hope that you will recognise that it was always C and G's intention to allow as many investors as possible to share in the Lloyds Bank payment.
As the society has made that clear statement, I hope that it will, once the Bill is enacted, honour its pledge and use the legislation to enable payouts to be made to all those who are defined in the Bill.
11 am
I shall now raise a few other questions, which my hon. Friend the Minister may be able to address, about the full scope of the proposed clause, the extent to which it operates and why it does not operate a little more widely. My hon. Friend the Member for Hertsmere raised the question of the difference between share and deposit accounts. It seems anomalous that people, whether joint or single holders of accounts, should find themselves in a different position as regards bonuses because of the name of their account.

Mr. Clappison: I am grateful to my hon. Friend for raising that point. He may know that before one of the building society takeovers, the society in question, before news of the possible takeover had come to light, urged investors to switch from share accounts, which would have given them an entitlement, to deposit accounts which did not. That action was urged on some building society members.

Mr. Merchant: That is an interesting revelation and adds strength to the need for further changes to do away with the legal distinction between share and deposit accounts, at least when bonus payments are made as a result of takeovers. From the point of view of the ordinary investing public, there is no discernible difference. I doubt whether many building society account holders are aware whether their account is technically a share account or a deposit account. It is true that building societies sometimes encourage investors to swap from one type of account to another without the investor knowing the full consequences. That point has some relevance to the proposed clause and I hope that my hon. Friend the Minister will address it.
I hope that my hon. Friend will also address, at least to a limited extent, the impact of the two-year limit and why it exists. I hope that further scrutiny will be given to the position of third, fourth and even subsequent names on accounts. I also hope that further scrutiny will be given to the exact definition of eligibility for bonus payments.
In the long term, it may be better if rather than tackling the problem via a complex, technical and narrow Bill—I accept that that is necessary, in the short term—we deal with it by legislation that clearly defines who should have the rights and on what basis they should have them. In other words, there would be a positive definition bestowing rights rather than a negative set of regulations

which seek to protect individuals and building societies when they wish to exercise the powers that the law gives them.
The simplest way in which to achieve our aim would be to give a clear right based on an account rather than a name. Whoever happened to be in charge of the account would thereby get the benefit of a bonus payment made when there were takeovers.
I have some reservations about the limited scope of the Lords amendments and I believe that more needs to be done. However, I do not want to be carping about the very real achievement of my hon. Friend the Member for Gloucester in getting his Bill this far. I have no argument with the need for the Lords amendments because I recognise that from the point of view of drafting they are necessary to achieve my hon. Friend's purpose. For that reason, I very much welcome them. I wish the Bill a hasty final passage into law.

Mr. Tom Clarke: On a point of order, Mr. Deputy Speaker. Would you allow me to inform you and the House that, during a debate that has been drawn out and repetitive, many disabled people are here in the Palace of Westminster expecting what is called the Barnes Bill—the Civil Rights (Disabled Persons) Bill—to be debated on Report? That will not happen because, yet again, the Government have contrived to defeat the Bill, and—

Hon. Members: This is not a point of order.

Mr. Deputy Speaker: Order. The Chair will decide whether it is a point of order. I am listening to the hon. Gentleman's point, but it is difficult to do so because of the noise from Conservative Members.

Mr. Clarke: The House will not be able to debate the Barnes Bill, which is overwhelmingly supported on both sides of the House and unanimously supported by organisations of and for disabled people, because of the Government's blocking action. There were 100 amendments in Committee—

Mr. Deputy Speaker: Order. That Bill is in Committee, and so is not a matter for the Chair. That is not a point of order for me.

Mr. Clarke: rose—

Mr. Deputy Speaker: If the hon. Gentleman has a point of order for me that is different from the one he has just put, I shall listen to it.

Mr. Clarke: I respect your view, Mr. Deputy Speaker. May I make it clear that the Opposition regard the Government's behaviour on disability as being so outrageous that we shall raise it with the Nolan committee and we shall speak—

Mr. Deputy Speaker: Order. That is not a point of order for me and that is the end of it.

Mr. Harry Barnes: rose—

Mr. Skinner: rose—

Mr. Deputy Speaker: The hon. Members who are rising may wish to raise the same point of order, but I have already ruled on it. If it is a different point of order, I shall hear it.

Mr. Barnes: On a point of order, Mr. Deputy Speaker. My point of order relates to the issue raised by my hon.


Friend the Member for Monklands, West (Mr. Clarke), but it is a separate point of order. I seek your advice, or advice from Madam Speaker through you, about the procedures that will be available to me once the Civil Rights (Disabled Persons) Bill has made its way through Committee; I am not discussing the quite serious problems in Committee. Once the Bill has made its way through the Committee, what avenues are open to me in my attempt to get the Bill returned to the Floor of the House? I understand that, technically, today is the last day that is available for debates on private Members' Bills.

Mr. Deputy Speaker: I can help the hon. Gentleman. The answer to his question is that he must name a day for the Report stage.

Mr. Skinner: On a point of order, Mr. Deputy Speaker. You, I and just a few others are regarded as Friday aficionados. We are here to oversee events and you do an excellent job in seeing that hon. Members keep to the narrow amendments, as evidenced again this morning. You will be pleased to know that a lot of us appreciate the way in which you do that job.
Can you assist in any way from the Chair, perhaps by passing on a message to the Speaker, in a matter that I have raised before, which has also been raised by my hon. Friends? Fridays are not satisfactory for getting through private Members' Bills. Do you agree that we are fast reaching the time when, instead of just having debates about relatively narrow Bills, matters that are controversial and important, like the Civil Rights (Disabled Persons) Bill should be debated? Yet we are fast reaching a time when those matters cannot be dealt with. I look forward to new improved Labour bringing about some changes in this matter.

Mr. Deputy Speaker: We can all look forward with hope, as I have been doing for a long time—hoping that I may hear a genuine point of order.

Mr. Darling: We are having a very long debate on a very uncontroversial new clause, on a Bill which has all-party support and which every one of us in the Chamber would like to see passed into law as soon as possible. It is surprising that the proceedings have been drawn out. Whether it is because of the Civil Rights (Disabled Persons) Bill or the fact that the Government, having returned the Whip to the hon. Member for Billericay (Mrs. Gorman), do not want to hear her speak in a later debate, I do not know, but it is curious that we are having such a long debate.
I shall first deal with the point made by the hon. Member for Beckenham (Mr. Merchant). He seemed to lay the blame for all the problems on too much regulation, especially too much regulation arising from the current legislation on building societies. It may surprise him to know that I tend to agree with him that one of the problems with the financial services legislation in general, and that on building societies in particular, is that there is too much regulation. That is an argument not for no regulation, but for reviewing the quality of regulation and for looking for a system of less regulation which works. It is important that, every time we introduce regulation in this sector, we ask ourselves what is it meant to do and

what is it trying to achieve, and if it does not achieve what we want, we should get rid of it and introduce a different type of regulation.
I tend to agree with the hon. Member for Beckenham, although I do not at all subscribe to the view commonly held by Conservative Members—I do not know whether the hon. Gentleman holds this view—that regulations are the problem with the financial services industry and that we should return to the free-for-all, the self-regulatory regime, which I believe has been substantially discredited.

Mr. Merchant: May I put it on the record that I agree with the hon. Gentleman's analysis? I was suggesting not that there should be no regulation at all, but that complex regulation which is unclear in its effect is bad. We want a clear set of regulations which people can understand and which are practical.

Mr. Darling: I am glad that the hon. Gentleman has made that position clear. Indeed, I suspect that that is one of the reasons why his own Front-Bench team will not introduce new legislation in this sector, or replace the Financial Services Act 1986. They know that, among hon. Members of all parties, the majority believe that the present system of regulation does not work and that we need to revisit it, to draw up a clearer, simpler system of regulation that is readily understood and actually works. If the Government choose to fill some of the empty days that we have just now with Government legislation—

Mr. Clappison: On a point of order, Mr. Deputy Speaker. I have been listening to the hon. Gentleman for a few minutes and I seek your guidance on whether he is in order. He is not talking about the amendments at all—

Mr. Deputy Speaker: Order. The hon. Member for Edinburgh, Central (Mr. Darling) certainly must have been in order or he would have been ruled out of order.

Mr. Darling: As ever, Mr. Deputy Speaker, you are quite right. The hon. Member for Hertsmere (Mr. Clappison) may like to reflect on the fact that one can obtain video recordings of one's speeches in this House, although I have never got one.

Mr. Duncan: We can understand why.

Mr. Darling: I feel that once, I have spoken, I should leave the matter there. If the hon. Member for Hertsmere would care to nip down to the video kiosk, he would be able to find out that he, too, made what I might call a fairly wide-ranging speech. It is important, if such matters are to be raised, that they should be replied to and dealt with. I have on many occasions made the point about the need to revisit regulations, and I am pleased to see that it appears to have general support. A common thread has run through what Conservative Members have been saying. While they congratulate the hon. Member for Gloucester (Mr. French) on what he has done, they point out that there are still a number of other necessary improvements.
That brings me directly to the hon. Member for Gloucester. May I start in a non-partisan way by congratulating him on his tenacity of effort in the course of getting the Bill on the statute book? He is, at the moment, my parliamentary pair. I say at the moment because the future of that depends on how long he speaks in reply and on the next amendment. Some of us have pressing duties outside the House, some 400 miles away.


At the moment, he remains my pair and I congratulate him. I am also very grateful to him for paying a proper tribute to my former hon. Friend, Lord Dubs, who introduced an almost identical Bill in the other place. All of us were trying to achieve the same thing.
We support what the hon. Member for Gloucester is trying to do. I support the new clause because it deals satisfactorily with the problems with which the hon. Gentleman originally attempted to deal, although I am bound to say that it still leaves many other people out on a limb, which he readily recognised, as have all hon. Members who have spoken.
11.15 am
I shall, however, make one observation. The hon. Member for Gloucester said that the Bill had sailed through all its stages in the House of Commons almost on the nod. In fact, I do not think that a word was said. Now we are having, within your discretion, Mr. Deputy Speaker, a rather wider debate than one may have anticipated on Lords amendments, which are normally dealt with fairly formally. I had exactly the same experience with what is now the Solicitors (Scotland) Act 1988, which passed all its stages on the nod. That is not a satisfactory way in which to legislate. Clearly, there is much interest in this matter, although if the other Bills due to be discussed today had not been tabled for debate, not quite so much interest might have been evinced.
Passing legislation on the nod is not a particularly satisfactory way in which to legislate, which is why I have always maintained that the extension of rights to the second signatories is a matter of public policy, and that the Government should have introduced appropriate legislation. Precious little Government business has been arranged as it is, as we can see from the business for last week, this week and next week. The Government have plenty of time to deal with the matter.
If the Government had introduced an appropriate Bill, they could have addressed the many problems to which Conservative Back-Bench Members have referred concerning people who have not been dealt with, for understandable reasons, by the Bill. The hon. Member for Gloucester was trying to identify perhaps the most glaring problem: the second signatories, typically widows, who are excluded.
The Bill does not of course make requirements mandatory but at least it opens the door, which brings me to the second point that has been raised on a number of occasions: building societies and banks which engage in mergers or acquisitions have discretion in many cases. The Halifax-Leeds proposals are quite different from the Cheltenham and Gloucester-Lloyds takeover. That is why I believe that the time has come to look at the Bill properly so that there are not any anomalies and so that people do not feel aggrieved because they think that they may have missed out.
We take the view that if we are to revisit the legislation, membership should be defined as widely as possible and people who think that they are members of a building society ought to be treated as such. When one goes to a building society and is invited to open an account, usually one does not have a clue whether one is a member and whether one may participate in the building society. I was recently told to change my account at my building society, which is not the subject of a takeover—unfortunately, because if it were, I would command better interest rates.

Nobody mentioned, until I asked, that I would lose certain rights. Such practices cannot be satisfactory, and that is yet another reason why the Government should introduce legislation so that we do not have to come back with another private Member's Bill to try to patch up the difficulties to which all of us have referred.

Mr. Nigel Evans: The two-year delay has been referred to time and again. When such a delay was first raised by the Abbey National, we talked about six months. A number of widows still suffered because they had to keep their account there for six months and there had to be no alteration. Now we are talking about two years and four times as many people will be affected. Should that not be looked at?

Mr. Darling: I am happy to look at the two-year delay. I understand fully why it is in the Bill—to stop people shopping around. I am pretty sure that a large section of the population are now opening accounts in every building society that they can think of. The stable door is now slammed shut, but everybody is outside it. We should consider that question and we should ask ourselves—I return to the point that I made in my introductory remarks—what are we trying to achieve.
It is obvious that there will be a spate of takeovers. I spoke at a building society conference in October and said that I believed that there would be a lot of takeovers. I was told emphatically time and again that I was talking nonsense. The more that the building society people went on about it and said that it would not happen, the more that I thought that I had a point. In my experience, the more that people protest, the more one thinks that they may protest too much.
In that short period since October, we have seen a spate of takeovers. Only recently, the Abbey National has shown an interest in the National and Provincial. Such developments are another reason for the Government, who are supposed to be responsible for public policy, to take a hand. It may be too late to do that this Session, but a new building society Bill for the next Session, should not be beyond the Government's imagination. It is difficult to see what Ministers are doing at present, so that task is one to which they could give their attention. When the Treasury Minister comes to speak some time before 2.30 pm, perhaps he will explain the Government's proposals and comment on the general question of regulation.
There will be a spate of takeovers. Conservative Members highlighted a number of problems and I highlighted others. If we are to consider building societies, let us consider every aspect of them. Building societies have for a number of reasons enjoyed a great public trust, and justifiably so. It is not for us to say that building societies must retain their mutual status, but when the public are encouraged to surrender that status for a payment of £1,000, public policy considerations should to be taken into account.
The nature of building societies and the way in which they conduct their business are beginning to change. I referred earlier to the Office of Fair Trading report on the sale of endowment mortgages. I urge an inquiry by the Personal Investment Authority, and I want mortgage sales properly regulated. Many building societies have got away with things that other institutions would not have got away with because the searchlight was on them. The insurance industry was under the searchlight because of


pension transfers. Banks have always been under the searchlight because of their charging regimes. Building societies have in some cases been getting away with murder.
I must not stray and test your patience too much, Mr. Deputy Speaker, but the point has been made that it is time thoroughly and comprehensively to review building society legislation. It need not take long. If the Government are prepared to review the Financial Services Act 1986, which has a direct bearing on the way that building societies conduct their business, so much the better.
I end as I began, in an unlikely alliance with some Conservative Members. We all know that the regulatory system is not working. Why will not the Government face up to that and introduce reform to benefit the hundreds of thousands of people who hold building society accounts and the millions of people who trade or operate in the financial services sector? They will look to the Government to take a lead, but I fear that they will look in vain.

Mr. Anthony Coombs: I agree with the hon. Member for Edinburgh, Central (Mr. Darling) that existing financial services regulation needs overhauling, particularly in respect of mutual and building societies. Coincidentally, there was provisionally to appear on the Order Paper today my ten-minute Bill, which I introduced two months ago, on an insolvency commission to beef up self-regulation.
The reason for lengthier debate than usual on Lords amendments is that we were unable to debate my hon. Friend's Bill when it first came before the House and the Lords amendments have significantly changed the Bill. I must declare an indirect interest, as my wife and son have a share account with the Cheltenham and Gloucester building society. Sadly, they are among the 27 per cent. of account holders who will not benefit because they have not held the account long enough.
My hon. Friend the Member for Stamford and Spalding (Mr. Davies) said that the Bill is an enabling measure. Although it addresses a particular inequity, it does not address all the inequities inherent even in the Cheltenham and Gloucester case. Although the two-year time limit in section 100(9) of the Building Societies Act 1986 seems to apply to that merger and to investors—of whom my wife and son are examples—it does not apply to depositors. If an account was opened before 31 March 1994, according to The Guardian report on the takeover in the Library brief, its depositor will not be eligible for the £500 per account. An enabling Bill does not necessarily mean equity, but I congratulate my hon. Friend the Member for Gloucester (Mr. French) on his initiative on behalf of about 5,000 widows in the Cheltenham and Gloucester areas.
I am surprised that the hon. Member for Cheltenham (Mr. Jones) is not present for the debate. I am sure that he will be the darling of widows in Cheltenham and Gloucester and much further afield, and that there will be many more merry widows. I do not mean to be facetious or light-hearted, because although the Lord amendments remedy an inequity, that relates to a bonus that society members could not have anticipated. I cannot agree with Lord Dubs who, introducing his similar Bill in the other

place, spoke of extreme hardship. That cannot be associated with not receiving a bonus that one could 'not have expected. Nevertheless, I am sure that my hon. Friend the Member for Gloucester will be warmly congratulated by the widows and others who will benefit from his Bill.
Such legislation will become increasingly important. There are 3 million widows in this country and, sadly, that number increases by 500 every day. As the hon. Member for Edinburgh, Central rightly said, rationalisation in the building society sector is proceeding apace and will continue. In addition to the Lloyds-Cheltenham and Gloucester merger, there is to be a merger between the Halifax and Leeds Permanent societies, and between the Abbey National and Provincial. Such mergers will be all the more likely, and bonuses all the more significant, if the Government adopt the deregulation task force suggestion that 5 per cent. of the value of a society taken over by, or merged with, another financial institution should be given as bonuses, compared with 1 per cent. at present, without a vote by members of the acquiring institution.
My hon. Friend the Member for Gloucester said that the Lords amendments address the flaw that confuses eligibility for a bonus with voting rights. One does not, and should not necessarily, follow the other. That interacts with section 100 of the 1986 Act. Schedule 2 of that Act defines representative joint holder. It would obviously be wrong for former wives, women who previously held an account in their own name and subsequently married or women who are the second account holders to be disfranchised if their spouse or a member of their family died. I was glad that my hon. Friend the Member for Gloucester was able to clarify that Lord Inglewood's amendment covering the situation when both parents die is taken into account by subsection (4).
Although the Lords amendments may be more rigorous in terms of the parliamentary draftsman, they are not necessarily more elegant than my hon. Friend's original proposals, following his expensive legal advice. In fact, the Lords amendments are precisely the opposite. It is ironic that my hon. Friend's Bill, which will benefit widows in the Cheltenham and Gloucester case, will benefit many others—but not in the Cheltenham and Gloucester case because that offer is particularly applicable to widows rather than to others caught by the situation.
It is also ironic that we are debating a relatively small amount of money—albeit significant to the individuals concerned. I note, as a surrogate member of the Cheltenham and Gloucester, that its chief executive, Mr. Andrew Longhurst, will, as a result of the merger, be able to exercise share options valued at four times his already substantial salary and emoluments, which are in the region of £350,000. One should consider—

Mr. French: My hon. Friend's statement implies that Mr. Longhurst might make that profit. It should be said that he is entitled to exercise options to that value, and the shares on which he will exercise his options can increase or decrease in value.

Mr. Coombs: I appreciate that. The takeover by Lloyds bank probably makes the former rather than the latter slightly more likely, and therefore he will benefit significantly.
Mainly because the Bill has been more narrowly defined to speed its passage through the House, it does not tackle the position that has been tackled by Lord Dubs in his new Bill on switched accounts—the position that arises when an investor switches, during the two years, from a deposit to a share account and possibly back again and, as a result, loses their eligibility for bonus.
I urge the Government, contrary to what Lord Henley said in the other place, to back that Bill. Although it is another example of the piecemeal legislation that we have said is not necessarily desirable in that sphere, it is a simple measure, and I hope that it would remedy that inequity, as the Bill of my hon. Friend the Member for Gloucester remedies the one that we have discussed.
As the hon. Member for Edinburgh, Central (Mr. Darling) said, the Bill should be regarded in the context of other desirable measures that are required to improve the accountability of building societies to their members. Obviously, indirectly, a clearer definition of what a member is in a mutual society should be part of that review. The definition of a member appears to be, not chaotic, but at least inconsistent.
I have a great deal of sympathy with what hon. Members, especially my hon. Friend the Member for Ribble Valley (Mr. Evans), said when they spoke about the two years and whether that period is necessary in a time when technology has speeded up the financial process.
I am pleased to see that the Minister of State, who will reply to the debate, said in a written answer on 24 February 1995 that the Government are committed, through primary legislation, to a series of measures that will make the relationship between building society members and building societies and other mutual funds more transparent. I especially express my support for an ending of the artificial distinction between shareholders and depositors as part of the definition, which was mentioned earlier. I also welcome the idea that any person who becomes a member of a building society should have a pack at the start, telling them of their rights. If we wish to ensure transparency in the relationship between a building society and its members, it is important that we improve the way in which building societies communicate with their members.
I have received several complaints from constituents about building societies, and other financial institutions, which have not informed their depositors or members of changes in interest rates on accounts, or of accounts that may have been withdrawn or effectively become sidelines for the mainstream operations of those building societies. As a result, perhaps as a result of their ignorance, those people have found themselves in lower-yielding accounts. That should not be necessary if they are given a regular update about changes in interest rates on different accounts and about what new accounts are available. I suspect, although probably it would be churlish to say so, that some financial institutions—certainly not the building societies about which we have spoken today—use that

ignorance to their advantage and therefore are slightly more reluctant to communicate with members about changes in interest rates than they should be.
I urge the Government to introduce the primary legislation, which should be simplifying primary legislation, deregulating primary legislation, but nevertheless effective primary legislation. Subject to those reservations, I very much support the Lords amendments and congratulate my hon. Friend the Member for Gloucester on the work that he has done.

Mr. Duncan: My hon. Friend the Member for Gloucester (Mr. French) is in an unenviable position now, as obviously, if the legislation is passed, he will be besieged by a long line of rich widows in his constituency, wishing to express their gratitude.
The Bill will remedy an injustice. I support the clause which has been amended in another place, but, as has been said this morning, although that solves a problem, it does not solve some remaining problems. We are simply tackling an injustice which was seen, which was clear, which was understood, and which needed to be tackled formally so that a building society could properly pass on to its account holders the money that is obviously seen to be due to them. Even now, the Bill only permits building societies to do so; it does not compel them to do so.
However, the issue that I want to mention this morning, and which I mentioned in an earlier intervention on my hon. Friend the Member for Gloucester, is that we must look behind the clause at the regime that will remain even when it has succeeded in tackling the specific issue that the clause tackles.
My hon. Friend the Minister and I have been in correspondence through questions about the building societies ombudsman. It strikes me that the clause does not, but could, try to draw together the two extremes of the regime, the better to bring about the redress of grievances of building society account holders.
At the moment, the Bill tackles the specific problem, but there are other aspects in which it is obvious that a category of saver has been affected by a decision, but that category of saver will not have its problems solved under the current regime.
Let me give an example. I tabled a question to my right hon. Friend the Chancellor of the Exchequer, asking whether he would introduce changes to the Building Societies Act 1986, which is the Act amended by the legislation before us, so that, when the building societies ombudsman confirms that maladministration is proven against the interest of a category of saver, all such savers should be recompensed, not only those who have registered a complaint.
Under the regime of the building societies ombudsman, if an individual has had his account wrongly administered, that is specific to the individual. However, when an individual says, "Look at the way that the society has handled every single account of the sort I have," a reference to the ombudsman will give the redress of grievance only to that individual and not to all similar holders of the same account who have had their account administered.
We therefore have a complete stand-off. My hon. Friend the Member for Gloucester has introduced primary legislation specifically to tackle a problem, yet


there are many other similar states of affairs where the ombudsman can only tackle the problems of an individual and not those of the whole category.
My hon. Friend the Minister of State, in answering my question, said:
The purpose of the Building Societies Ombudsman scheme is to provide an alternative to legal action for settling individual disputes between societies and customers. Each case must be decided by the Ombudsman on its merits and the details of any two complaints are seldom identical.
I agree with him. I think that is right. However, he also said:
it would not be appropriate for the decision of the Ombudsman in one particular case to be applied automatically to a number of other cases which had not been submitted to him.
I believe that that is rather disingenuous and wide of the mark, because it is quite possible—there is an example in the amendment in the clause that my hon. Friend the Member for Gloucester will, I trust, succeed in passing through the House this morning—that an individual case brought in the regulatory regime of the 1986 Act can highlight a single problem that applies to a category of saver. However, the system at the moment does not allow the effect of that individual's complaint automatically to apply to all people who are in the same predicament. That is wrong.
I should therefore be grateful if the Minister of State would consider once again the role of the ombudsman and the guidelines in the 1986 Act, which either would allow him to call on a building society to remedy such a defect for all its account holders or to continue with the regime whereby the Government simply allow the individuals to be picked off one by one, and the overriding problem is not solved.
If my hon. Friend the Minister of State could take that issue on board, it would solve the problem of the amendment dealing with only the problems identified by my hon. Friend the Member for Gloucester and leaving many other problems unsolved.
All we are asking for is a little nod and a wink from the Treasury suggesting that the Building Societies Act 1986 should include an understanding that where malpractice or simply injustice involving one category of saver is identified—such problems are normally identified by straightforward, common-sense observation—such difficulties can be addressed without the need to resort to more primary legislation of the sort that my hon. Friend has successfully brought before the House this morning.
Such a measure would solve the case of one my constituents, Mr. Adams, who spotted a deficiency. All similar account holders will not obtain redress unless they burden the building societies ombudsman with a series of individual cases that are exact repeats of the one brought before the ombudsman by Mr. Adams.
I fully support the amendment, and urge my hon. Friend the Minister of State to look, behind it and go further. I urge him to tweak the way in which the Building Societies Act 1986 works, so that it can improve the regulatory regime and address the specific problems which we know exist and which are not covered by the provision before

us. By that simple step forward, we would have achieved a greater, more effective and more just regime for building society account holders.

Mr. Nigel Evans: I congratulate my hon. Friend the Member for Gloucester (Mr. French) on his persistence in ensuring that the problem is resolved. I understand that, if the Bill is not enacted by 31 July, 5,000 widows will lose their entitlement to bonuses. There is a definite need to get the problem sorted out. In addition, as the hon. Member for Edinburgh, Central (Mr. Darling) said, more mergers and takeovers will probably happen in future. If that is so, many other people could encounter the same sort of problems. We must get the difficulty sorted out as quickly as possible.
I was in the House on 10 February when the Bill passed to another place. There was no debate then. There is consensus in the House that the Bill should become an Act. It is therefore important that we have the opportunity today to discuss one or two aspects of the Lords amendments that we believe will improve the legislation, so that many more people will benefit from it in future. As has been said, the Bill does not sort out all the anomalies. As was said in the other place, we want to ensure the Bill's swift passage. We may want to add all sorts of things to the legislation to improve it for many people, but in so doing we could jeopardise the Bill's passage.
The legislation is extremely technical, although it is a short Bill in itself. Many of us have spoken today about the two-year period during which the account should remain exactly as it is in order for someone to benefit from the bonus. As has been said, that provision should be considered in future. Two years is far too long a period.
I can understand the reason for having a length of time over which the account should have been opened. I can imagine the switching of accounts that would take place, particularly with the current speculation on mergers and takeovers, but I also agree with the hon. Member for Edinburgh, Central that there must be many people in this country who hold accounts with many building societies just in case there could be a future merger or takeover. That is not a problem that troubles me, as I have no money. I have been blessed with that, and I do not need to open accounts everywhere, but a number of people must be opening accounts all over the country just in case.
I am delighted that the new clause will have the same effect as that of the original Bill that my hon. Friend introduced on 10 February. It is most important to consider those widows who lost out under the Abbey National flotation of 1989. The account had to be opened and not changed for six months. Many widows lost out then, which was when the problem first arose. Now, with the two-year period, far more people will be affected.
11.45
My hon. Friend the Member for Wyre Forest (Mr. Coombs) made an important point when he asked whether we should get so worked up, and said that some people think that it is only a bonus, not something that they already had. He said that we cannot talk about great deprivation when someone has never had the bonus in the first place.
I have never accepted the notion that what one has never had in the first place, one will not miss. I am sure that there are many people who, like me, look at the six


numbers in the national lottery on a Saturday night, realise that they have lost and feel a sense of trauma because they have already spent the money in their imagination, and have lost. However, we must address the problem of injustice, which is what my hon. Friend the Member for Gloucester is doing with his Bill.

Mr. Anthony Coombs: It is not deprivation.

Mr. Nigel Evans: It is not deprivation, but we want justice to be seen to be done for many people.
There is also a problem involving the account details of newly married couples, which will, in many cases, be changed when new joint accounts are opened. There is no sense in that action resulting in people losing their bonuses. There is almost a common-sense justification for keeping both accounts open in an existing building society and not changing the details.
My hon. Friend the Member for Hertsmere (Mr. Clappison) has already said that there will be other problems for those who get divorced. That matter also needs to be considered. I understand that there was an initial prospect of reference under the Sex Discrimination Act 1975 because it was felt that the policy discriminated against women. It was decided not to progress with that measure, because it was felt that one did not necessarily have to open a joint account as Mr. and Mrs.
In 99.9 per cent. of cases, those accounts would be opened as Mr. and Mrs. when the married title is included. I know of no couples who are known as Mrs. and Mr. That is an anomaly, irrespective of whether one is not allowed to open accounts in the customary fashion of Mr. and Mrs. That issue must be considered.
Although the issue of third and fourth subsequent holders of joint accounts is not covered by the amendment, it needs to be looked at. I understand why, for the sake of the Bill's simplicity, it has not been addressed now, but I hope that it will be addressed in future. As my hon. Friend the Member for Rutland and Melton (Mr. Duncan) said, that may be something for the building society ombudsman to look at in future. Perhaps his powers will enable him to address such anomalies. I am sure that there will be many more problems that we have not even mentioned today.
It is also significant that the amendment deals with the situation in which a joint account was held and the mother and father die, leaving a son. I congratulate Lord Inglewood on dealing with that problem.
The legislation is not a cover-all; there will be many other anomalies in future. But so many people will lose if we do not resolve the problem that we must ensure that the Bill is enacted as quickly as possible.
I am therefore delighted to support the legislation. I hope that it passes through the House as quickly as possible, so that we can help the many people who will lose if we leave it as it is. I congratulate my hon. Friend the Member for Gloucester on his persistence and determination in ensuring that a wrong is put right.

Mr. Jenkin: I join my colleagues on this side of the House in congratulating my hon. Friend the Member for Gloucester (Mr. French) on bringing the Bill to this stage. I look forward to seeing it reach the statute book.
Some aspects of the new clause represent a continuing trend rather than an end to the argument. We are perhaps opening the way to allow the transfer of accounts through

a chain of account holders without losing equity share, and staying within the guidelines of the two-year rule. We are perhaps also creating a situation whereby litigation may lead to splitting accounts which would continue to hold equity within the building society.
The point I shall address specifically—I will speak only briefly in the debate, as I wish to see the Bill progress—is the fact that the Bill's provisions are not wide enough. The two-year rule was introduced to prevent new account holders from opening accounts with a building society immediately before a change of ownership. Building societies were not designed for the transfer of ownership in that way.
The issue we are addressing has arisen because of the trend for building societies to become more like banks, including in their manner of ownership. This issue shows that we have not found an equitable way of distributing the ownership of building societies among their members. I do not believe that sticking-plaster efforts such as the two-year rule, followed by amendments such as the Bill, address the whole question.
Unless we plan to allow building societies to remain rather diverse institutions, they shall continue to be forced to become more and more like banks. If that is to occur, surely it is sensible that they should be owned in the same way as banks. The ownership of those societies should be transferable among account holders in the same way as shares are transferable among the stockholders in a bank. Maintaining the fiction that building societies are owned by their members is to maintain an uneven distribution of their ownership.
My hon. Friend the Member for Wyre Forest (Mr. Coombs) referred to the heads of building societies receiving large financial benefits from a change of building society ownership. One can see why there is a temptation the ownership of building societies to change. Senior executives in a bank that has a full quota on the London stock exchange can raise their sights and advance their careers far more readily than those who are trapped in an institution such as a traditional building society.
One suspects that there must be a temptation for chief and senior executives of building societies to merge with other financial institutions not directly for the benefit of their members. They can limit the benefit to members; they can sugar-coat the pill in order to gain the consent of members who did not join the society originally to secure a capital gain.

Mr. Darling: I am interested in what the hon. Member is saying. Does he agree that nothing would do more to damage the reputation of the building society movement than if its chief executives indulged in excessive share options and rewards in the course of takeover bids? If the Government are looking at introducing legislation in connection with building societies, they should ensure that that sort of irresponsible and greedy behaviour does not occur in the building society movement in the same way as it has occurred within the privatised utilities.

Mr. Deputy Speaker: Mr. Patrick Jenkin.

Mr. Jenkin: It is Bernard, actually; my stature has not grown to that extent.
I do not wish to cast aspersions on any senior executive in any building society. Whereas the hon. Member for Edinburgh, Central (Mr. Darling) leaps immediately to the


conclusion to which the politics of envy lead him, I refer to the temptation that must exist because there is no instantly fair and equitable way to distribute the benefits of a change of building society ownership.
I ask the Minister of State to consider whether we should make membership of building societies transferable. By all means still apply the two-year rule; building societies are not intended to be instruments of speculation, and the two-year rule would preclude short-term speculation. Why should not an individual who has a potential or an actual benefit in prospect as a result of holding a share account in a building society be allowed to sell that benefit to someone else in some kind of regulated market? We could speed up the process by adding some equity to it.
Once ownership became directly transferable through the holding of accounts, control would be gained through the acquisition of enough accounts. I think that that would be a fairer way in which to transfer ownership, provided that there was legislation—perhaps similar to that which applies to the transfer of companies—in order to prevent the suppression of minorities.
I leave that thought with my hon. Friend. The Bill addresses cases of injustice. Many of my constituents have written to me about the Cheltenham and Gloucester building society, and I am pleased to see their cases have been dealt with. However, we have not faced the truth about the way in which building societies are developing. They are evolving into completely different types of institutions.
They were invented originally as local, mutual self-help groups for borrowing and lending purposes, but they are becoming vast financial institutions, which, thankfully, are having a very positive effect on retail banking in this country. They are making the market much more sophisticated. Many more accounts are held per employee in building societies than in the average retail bank. That will have the positive effect of forcing efficiencies to occur in retail banking in the future.
We are not yet facing the full consequences of the development of the building society industry in this small measure, welcome though it is.

Mr. Nelson: This has been an extremely valuable and thoughtful debate on the Lords amendments to the Bill introduced by my hon. Friend the Member for Gloucester (Mr. French). I join those hon. Members who have welcomed my hon. Friend's initiative and endeavour, the manner in which he has spoken to the amendments today, and the efficient organisation that has enabled his original ten-minute rule Bill to reach its final stages in the House of Commons.
Many thousands of people outside the House—not least in my hon. Friend's constituency—will be very grateful for the efforts that he has made on their behalf today. The Government are also grateful to my hon. Friend, and we are happy to pay a tribute to him today.
There are some 37 million building society accounts, and this debate will be of keen interest to those account holders. Although the purpose of the Bill and the amendments that we are considering are somewhat narrow, wider issues have been raised in the course of the debate which will have a resonance and will generate interest far beyond this place. Some 37 million building

society accounts means many account holders. Therefore, I was very surprised to hear Opposition Members suggest that we were dragging out debate on this very important issue.
It is not for us to determine the priorities of business in the House today, but as you will have observed, Mr. Deputy Speaker, that it is almost exclusively Government Members who have contributed to the debate. Not a single substantive speech has been made by a Back Bencher from either the main Opposition party or any of the minor Opposition parties. Of course, the hon. Member for Edinburgh, Central (Mr. Darling), as always, made a pertinent speech, and I shall endeavour to say a word or two about that in a moment.
12 noon
However, it should not go unmentioned that there has been virtually nobody on the Opposition side of the House today. People will make their own judgments about how real an interest the Labour Opposition take in the matters of personal finance and savings that are of such importance to my hon. Friends, as demonstrated by their presence and their speeches.
It is certainly not true, as the hon. Member for Edinburgh, Central alleged, that we have dragged out the debate in any way. I know that he is anxious to get away, because he said so, but I intend, as usual, to do hon. Members the courtesy of responding to the points that have been raised.
The speech by my hon. Friend the Member for Gloucester spoke for itself, and I have little to add to it. He presented the arguments extremely well for the amendments moved by Lord Henley in another place, and he has also demonstrated that he has been flexible within the narrow intention of his Bill in trying to deal with a wider range of anomalies that have arisen during the takeover.
My hon. Friend the Member for Stamford and Spalding (Mr. Davies) raised a theme that has subsequently been reflected by others—the nature of people's interest in mutuals, whether mutual banks and building societies or friendly and provident societies, of which there is a substantial and long-standing tradition in this country.
The 1986 Act provides that investors and borrowers are members of a building society. Linking what my hon. Friend the Member for Stamford and Spalding said with what my hon. Friend the Member for Colchester, North (Mr. Jenkin) said, it is important to appreciate that mutual societies are those in which, historically, people have had a provident interest, and a joint and several participation in the whole of the assets and the organisation.
Often, that mutuality springs out of the provident requirement that in certain circumstances they will obtain benefits. Although those have become more closely defined and structured with the development of building societies and their service accounts, the fundamentals remain the same.
With all due respect to my hon. Friend the Member for Colchester, North, who seemed to imply that mutuals should in some way become companies, or non-mutuals, with members having shares that could be traded, it would be difficult to move from the status of a mutual to a traded interest in non-corporate concerns. However, I should like to reflect on what he and others have said about that idea.
My hon. Friend the Member for Stamford and Spalding said that, when people join a building society, they should know rather more about the nature of the mutuality and the interest that they are acquiring, be it latent or direct, in that society, and about their rights therein. Indeed, that has been a theme and a conclusion of both stages of the review of the Building Societies Act 1986, which we have now finished.
My statement at the end of that review made it clear that we intended to introduce requirements to ensure that building societies communicated clearly, and as a matter of course, with their members about the nature of their interests and about the rights, entitlements and responsibilities involved in taking out an account. Indeed, many already do that. Much progress has been made, but until the recent spate of mergers, conversions, takeovers and proposed takeovers, many people were unaware of the latent interest that they had in their building societies.
My hon. Friend also asked how those values should be assessed. That is a difficult issue, given that people have varying amounts in their accounts, and do not necessarily deposit a given amount in a building society account on the basis that they are buying an increased share of the net assets of the business or of its profitability. Presumably they deposit money on a market basis, seeking to obtain a reasonable rate of return on their savings. It does not necessarily follow that the value of their interest in the society, or the value of the society as a whole, can be assessed on that basis. However, when a society is valued, as has had to be done by the commercial and financial advisers of the companies that have made bids, that is done on a conventional basis.
Both in the 1986 Act and subsequently, we have been anxious to ensure that building societies as a movement continue, and that to the extent that change and amalgamations take place, and the number of building societies is whittled away by takeovers, that should happen in an orderly way.
At the turn of the century, there were more than 1,000 building societies; there are now about 83. Recent events have led to some speculation that that process of diminution of the sector may gather pace. I do not know about that, and it is not for me to urge the process on or to speculate about it. But I am concerned to ensure that the good banking and savings practices of building societies, which have proved enormously popular, are not done away with. To use the colourful phrase that I used at the time, I do not want there to be a duck shoot of building societies.
For that reason, in the initial stages of the review of the Building Societies Act 1986, we tried to ensure that we did not reduce or sweep away through repeal of that Act the thresholds and requirements placed on bidding companies, so that we did not make it even easier for them to decimate the building society sector.
On the other hand, no Government should be in the business of trying to preserve a sector or institutions against the interests of its customers and members. In striking that right balance, the Government have sought to introduce measures to increase not only the powers but the accountability of the building societies, and thereby to bring them up to date.

Mr. Jenkin: If transfers of ownership are purely in the interests of the customers, why are they always given a windfall gain on transfer? Why is not the benefit of a

transfer of ownership an end in itself? It seems to me that the point of transferring ownership is to release the good will contained in the businesses, because the building societies are businesses at the point of their being transferred.
If they are to be treated as businesses, there is a case for the proper and fair distribution of the equity, rather than an arbitrary distribution of equity by means of a fixed bonus distributed to various account holders, with other people benefiting in different ways.

Mr. Nelson: I agree with the latter part of my hon. Friend's intervention, but he will be aware that it is possible to make differential consideration offers to members of building societies in the event of a takeover. That is not possible with share distribution. If shares were offered by way of consideration, there would have to be a standard offer in the case of a takeover. However, certainly for those who have been members for more than two years, cash incentives of differential levels can be provided over and above that. I believe that the proposals of the Halifax and Leeds merger and conversion may intend to provide for such a procedure.
I hope that my hon. Friend was not suggesting that building societies do not have a value. They do, and that has to go somewhere on takeover. Clearly it would be wrong if it just went, for no consideration, to the bidder. There is a value that is owned by the members of the building society, and can only be owned by them. It is not owned by anyone else, such as the executives or other people with no equity interests in the society.
The aim is to come to a fair conclusion about how one can estimate the individual value within the building society, given that there is no natural share, and bearing in mind the fact that the amount of money that people may have in a building society account is not necessarily a representation of their true interests in that society, because they may have deposited the money only yesterday. That is not necessarily a sign of an abiding interest in the growth and development of a society.
My hon. Friend the Member for Hertsmere (Mr. Clappison), in an excellent speech, asked, as did others, whether a period as long as two years was necessary. The 1986 Act, which set the period, was inevitably arbitrary. Some rough justice does occur as a result. The fact that the Act included this proviso or precondition, specifically to prevent the sort of building societies' duck shoot to which I referred earlier, is open to criticism; but it was designed to ensure that any change should be orderly and that there would be no disorderly movement of funds between building societies in speculative ways.
There may be better ways of tackling the problem, but we cannot think of one that is significantly more equitable than the provision set down in the original legislation. It is a fact which the House must recognise that lots of anomalies do and will continue to flow from the arbitrary and capricious nature of a two-year threshold.
My hon. Friend the Member for Hertsmere was also worried about injustice that may occur following divorce—as was my hon. Friend the Member for Beckenham (Mr. Merchant). The problem that arises is that many people would consider it inequitable if a single joint account gave rise to two bonus distributions. Who precisely should qualify? It is a difficult choice.


For divorce, it would be wrong to stipulate in legislation that both people, on separation of their marriage and their account, should have rights to consideration, because that would be to impose a settlement on the divorce process itself. Where there are assets on divorce, the couple's worth should be assessed, and would be subject to judicial separation. So I do not think that it would necessarily be right to carry forward separate and new entitlements to consideration by way of shared distribution.
The rule is that, when the first named account holder continues as a member of the same society, he or she will be the beneficiary of such a distribution. I agree that that can sometimes be seen as a little rough, but I am afraid that it is almost inevitable, given the undesirability of a dual distribution from what was one account. I reiterate, however, that I shall reflect on this and other points raised in the course of the debate.
My hon. Friend the Member for Beckenham spoke about the changing structure of building societies, which he said should be reflected in law. Indeed it is. It forms the basis of many of the substantive conclusions to emerge from the first and second stages of the review.
My hon. Friend also asked whether the Bill's scope was wide enough—for instance, where deposits are concerned. Lord Dubs has introduced a Bill in another place. We must wait and see what progress it makes there, but it would deal with part of the problem. That Bill, however, applies only to people who move from a share account to a deposit account, and not vice versa—whereas it is my impression that most of the problems arise when people move from deposit accounts to share accounts.
We have been looking into this matter. The House will be aware that one of the recommendations that I have announced as part of the review is that we should do away with the differentiation between a member's account and a deposit account. Most people going into a deposit account with a building society have not been aware that they are doing away with their enfranchisement rights in the society. We intend to put a stop to that.
The hon. Member for Edinburgh, Central spoke of anomalies, and made the slightly carping point that the Government, not my hon. Friend the Member for Gloucester, should have introduced the Bill. I certainly do not think that I could have done more justice to the issue than he has done, and I have no complaints about the fact that he is taking the Bill through the House, not I.
The hon. Member made a point, which you, Mr. Deputy Speaker, were kind enough to allow, about endowment mortgages, which of course are of topical interest. I cannot deal with them at length today, but I shall read carefully Sir Bryan Carsberg's report on endowment mortgages. I do not intend to give a peremptory reaction to it today.
The hon. Gentleman will be aware that endowment mortgages, unlike repayment mortgages, are covered by the Financial Services Act 1986; and that, from the beginning of this year, the new regime for disclosure will—we hope and intend—substantially improve the avoidance of problems of mis-selling. I shall wish to consider carefully the cases that have given rise to concern—especially the disappointing persistence rates with endowment mortgages, which are referred to in the

report. I shall also wish to examine methods of redress to allow people who feel that they have been sold a pup to go most legitimately to the regulator.

Mr. Darling: I am grateful for the Minister's remarks, but I wish to press him on this point. He said that he was willing to consider cases of redress. Presumably he is not inviting people to write to him personally. Would it not be better to ask the current regulator, the Personal Investment Authority, to investigate these matters, so that, if people think they have a problem, they can go to someone to have them investigated?

Mr. Nelson: I said what I said not because I am uninterested but because it is not appropriate that people should write to me about these issues. I shall want to read the report before saying what, if anything, I think should be done. But it is a matter of fact that people can go to the regulator about mis-selling if they feel aggrieved. I want to consider whether there are implications for the PIA in all this—but I do not want to be drawn any further today.
My hon. Friend the Member for Wyre Forest (Mr. Coombs), who was courteous enough to let me know that he could not stay for the rest of the debate, said that the Bill did not deal with people switching between accounts. He was rather in favour of sweeping up such circumstances in legislation. But, as I said before, we are ending the distinction between deposit accounts and shareholder accounts: that should largely deal with the problem.
Moreover, as I have told a number of hon. Members in correspondence, my hon. Friend's point would not solve any problems in respect of Lloyds bank and the Cheltenham and Gloucester, since legislation to enfranchise such people for distribution would have to be retrospective, and that would not be justifiable.
I also rather doubt whether people who have had a deposit account in a building society for some time and who then suddenly switch to a member's account in that society should be entitled to a distribution. This, too, may be one of those areas of rough justice owing to the demarcation set out by the two-year rule and all that flows from it, but we have no proposals at present to move beyond what is set out in the Act.
My hon. Friend the Member for Rutland and Melton discussed the ombudsman's decisions. He said that, when the ombudsman has investigated a case and decided that there has been maladministration or improper dealing with people, his decision should apply generically to other cases. I shall consider the representations that my hon. Friend has put to me; each case, as he said, may be very different.
I also have to be mindful of the compliance burden. Presumably, a complaint investigated by the ombudsman would have to be promulgated in some way so that the conclusions were known to all other building societies, which might, in some cases, have to review, identify and reassess an enormous number of accounts. That might be perfectly justifiable for a case of significant maladministration or injustice, but I doubt whether I should recommend to the House that we implant in legislation an automatic requirement that it should happen in most cases.


The way in which it should work is that the Building Societies Commission, which is there as the regulatory body to oversee these matters, should take note of particular criticisms, of substance raised by the ombudsman, and should, through its prudential note procedures or in other ways, try to ensure that injustices are not reflected elsewhere. I would like to consider that point.

Mr. Duncan: It seems that the sort of instance that I described falls between two stools—regulatory and primary legislation. Does the Building Societies Commission have the power at the moment to compel a building society to remedy a defect for a category of account where an individual case has shown the administration of that account to have been universally wrong?

Mr. Nelson: No, it does not specifically have that power. The Building Societies Commission is a pretty intrusive body—in the best sense of that description—and it can, through prudential notes generally, and through advice and discussion specifically, carry a great deal of weight with the building societies. One of the reasons why I think that sector has been so popular with the saving public, and why there have been no collapses of building societies—as, I regret, there have been of banks—is in part because of the excellent job that the Building Societies Commission has done over many years in maintaining the integrity and fairness of the rules and operation of the building societies. If I asked the first commissioner of the Building Societies Commission about these matters, I would expect the commission, if a serious issue was raised as a result of an ombudsman's report into an individual case, to do something about it. If it did not, I hope that my hon. Friend or others would hold me to account. Let us see whether we can make such criticisms and reports work better within the existing system. If they do not work, perhaps we shall have to look at the matter again.
My hon. Friend the Member for Ribble Valley (Mr. Evans) made an excellent speech in forthright support of my hon. Friend's Bill and the amendments that we are considering today. He said that, "a wrong had been righted," but also acknowledged that there were further anomalies, which he felt should be addressed. We will consider, both in the process of secondly legislation and in possible future primary legislation, a number of the points that he raised in his speech today. I am grateful to him for making those points.
My hon. Friend the Member for Colchester, North (Mr. Jenkin), whose speech I referred to earlier, made an additional point about the incentive or personal interest of senior executives in building societies in takeovers. I must be quite frank. That is matter that has concerned me. I have the highest regard for the integrity of the boards of building societies and for the record and popularity of those institutions over many years, but it is a fact that, until recently, or until my proposal to change the regulations, building societies have not been under an obligation even to report to their members that they have been in receipt of a takeover bid or offer. One can only speculate about the reasons why they might not transmit to their members why they had received such an offer and decided not to proceed with negotiations. That is not at all satisfactory. Although some people have suggested that such approaches should be notified immediately they

are received, it is difficult in law to differentiate between firm approaches and scurrying discussions. Therefore, I have proposed that such proposals should be brought forward at the next annual general meeting of building societies.
That is only part of the issue. My hon. Friend is concerned, quite rightly, that such are the remuneration packages that are on offer—the big money that is available—to senior executives in building societies on takeovers, and so great might be the inducement, that they would be looking to be bought out or to move with alacrity out of the building society sector into becoming plcs. The responsibility of the Government and the House in that regard is to ensure that there is adequate transparency.
I refer my hon. Friend to the regulations of 1988, which require that the prospectus for a takeover discloses the full details, including share options and the rest of it, of any remuneration package that would form part of a takeover bid. I am anxious to ensure that, before members consider or vote, even with the highest threshold requirements in building society takeovers, they are aware of the remuneration packages being proposed and the consideration that might be available to the senior executives. That is as far as the Government should propose to go for the time being, unless there were the most obvious abuse, to the detriment of members of building societies. I do not see such abuse at the present time. The figures involved have been given some publicity. I think that the right way forward—here, as in other areas—is to ensure that transparency is uppermost at all times.
With those remarks, I hope that the House will conclude that I have answered a number of the legitimate and important points raised by my hon. Friend the Member for Gloucester. His Bill and the amendments thereto put right an anomaly—an injustice, to use the word of some—and will be of very real value to many people, particularly widows.
I hope that the measure will enjoy the whole-hearted support of both sides of the House. I congratulate my hon. Friend on what he has done so far in achieving that end.

Mr. French: With the leave of the House, I should like to respond as briefly as possible to a few of the points made by hon. Members.
I am grateful for hon. Members' many contributions to the debate, particularly as a number of them, I am sure, have pressing business in their constituencies. It is good of them to be here today to debate the Bill.
My hon. Friend the Minister responded in detail to most of the points. I am grateful to him for his kind remarks and for the thorough way in which he dealt with them. He demonstrated that the forthcoming programme on building societies that his Department will introduce not only has an obvious coherence but will bring together, combined with provisions in the Bill, a regime under which building societies can operate and under which, one hopes, the vast majority, if not all, the anomalies that have been addressed this morning will eventually disappear.
There were a number of recurring themes, very much set off by the opening remarks of my hon. Friend the Member for Stamford and Spalding (Mr. Davies), who posed the important question: what is an equity interest? That same theme was echoed in the remarks of my hon. Friend the Member for Colchester, North (Mr. Jenkin),


who drew attention to the fact that the operations of many building societies is now becoming much more like banks. It is necessary in law to recognise that that is happening. An ingredient of the transformation that is taking place is, of course, the current distinction between share and deposit accounts, which my hon. Friend the Minister has indicated he is minded to bring to an end. The reason why these matters were not relevant to my Bill is that my Bill seeks to amend the 1986 Act, which deals with share accounts only. Deposit accounts would, inevitably, have fallen outside the scope of what I have endeavoured to do.
I want to comment on the points made by my hon. Friends the Members for Beckenham (Mr. Merchant), for Ribble Valley (Mr. Evans) and for Colchester, North about the necessity or otherwise of the two-year qualifying period. It is clear that it is destined to be the subject of further debate. My instinct is that there is some justification for a two-year period because it recognises the contribution made to the business in question by its regular customers. That is an important ingredient in the concept of mutuality—so when dealing with a mutual institution, there are strong arguments in favour of the two-year qualifying period. I recognise that in the event of changes by institutions from mutual to non-mutual status, my arguments would have less force. I also accept that there will be changes in due course.
My hon. Friend the Member for Wyre Forest (Mr. Coombs) mentioned depositors. In Lloyd's bank's takeover of the Cheltenham and Gloucester building society, the position of depositors was determined by the High Court; it did not fall under the 1986 Act. The High Court made a declaration on how the current law stood. The consequences for depositors in the society was that if the account had been opened before March 1994 it qualified for a bonus, but if it had been opened after March 1994 it did not. As my hon. Friend the Minister has made clear, that problem will be resolved in future because the distinction between deposit accounts and share accounts will be brought to an end.
12.30 pm
I was interested in the points made by my hon. Friend the Member for Rutland and Melton (Mr. Duncan) about the ombudsman, and in particular about the consequences of an injustice having been identified in the case of one saver. He questioned the degree to which that might affect other savers in the same category and whether the ombudsman, having identified the injustice for one saver, had the power to take steps to deal with other savers in the same category.
My understanding of what my hon. Friend the Minister said is that, currently, the Building Societies Commission can go some way towards remedying the problem, but obviously it is another area that requires further consideration and debate, perhaps in the context of my hon. Friend's building society review.
My hon. Friend the Member for Hertsmere (Mr. Clappison) has shown that if I ever have to go through this process again, I will not need to consult three firms of solicitors; instead, I can turn to my hon. Friend to do the job for me. Of course, what I do not know is how his fees compare with theirs, but no doubt I shall find out.
My hon. Friend said that in divorce cases, if the wife withdraws from the joint account and opens a new account, but the husband keeps the existing account in operation, he will qualify for the bonus but she will not. My hon. Friend is correct. However, what happens in divorce cases is far removed from the scope of the Bill. It must be a matter for agreement between the divorcing parties. It would not be possible to devise a system in which every aspect of divorce could be accommodated. It is important that as well as ensuring that the law is what it should be, there must be a certain amount of good faith among those affected by the law.
The hon. Member for Edinburgh, Central (Mr. Darling) contributed to the debate, but has kindly apologised to me for the fact that he has had to leave on urgent business. I still have the privilege of being his pair and he mine. He made the point that the Bill was not adequately considered on Second Reading because it went through on the nod. I remind him, however, that the Bill went through on the nod on 10 February to avoid congestion in the Committee that considers private Members' Bills. It was not in order to avoid debate on the Bill in the House, but it was very much in order to accommodate other Bills in which he and the Opposition in particular have a special and legitimate interest. I hope that the shortage of debate on 10 February has been made up by this morning's thorough debate, and once again I thank all those who have taken part in it.
Question put and agreed to.

Clause 2

CITATION

Lords amendment: No. 2, in page 2, line 10, at end insert—
("( ) This Act shall apply in any case where the vesting date (within the meaning of section 100 of the Building Societies Act 1986) falls after the passing of this Act.")

Mr. French: I beg to move, That this House doth agree with the Lords in the said amendment.
We are coming, I hope, to the conclusion of the proceedings. The Bill will come into force on Royal Assent. It will apply to any transfer where the vesting date comes later. This is an important provision that is designed specifically to deal with the circumstances of the Lloyd's bank takeover of the Cheltenham and Gloucester building society.
The terms of the transfer include, as we heard earlier, a provision of up to £25 million to pay eligible widows and other survivors of deceased first-named holders, provided the Bill is enacted before the proposed vesting date of 1 August.
Clause 2(2) removes any doubt about the application of the Bill. For example, it might otherwise have been argued that the Bill could apply only to cases where the transfer agreement had been signed between the bank and the building society, or where the transfer resolutions had been passed by the members after the enactment. Both those events are already past in the Cheltenham and Gloucester building society case.
By passing the Bill today, the House will make it possible for the provisions in the transfer agreement of the Cheltenham and Gloucester building society to be enacted, even though the vote has already taken place and


the vesting dates and distribution of bonuses are not destined to take place until 1 August. I hope that the House will therefore accept how essential clause 2 is.
As the House knows, this has been a ten-minute Bill. Such Bills are rare and delicate flowers that must go down a perilous and treacherous path. It seems that few make it. I hope and believe that the House's mood today is that the Bill will make it. I look forward to that happening.

Mr. Duncan: I add my voice in support of the comments of my hon. Friend the Member for Gloucester. It is essential that the clause be included in the Bill. It would be appalling if we passed a Bill that was designed to clear up an anomaly and a problem, only to prompt a judicial review or a horrible law case because the triggering of the Bill is not clear. The Lords amendment clears the matter up to ensure that the legislation is not retrospective or, as it might be more properly be described, retroactive. The amendment must be incorporated in the Bill and I hope that the House will pass it today.

Mr. Nelson: The amendment may appear to be a technical consequent amendment, but it arose as a result of, I believe, consultation with interested parties by my hon. Friend the Member for Gloucester. A good deal of debate took place about the provision in another place. At that time, the points made by my hon. Friend for Rutland and Melton were deliberated.
Both the Government and, I believe, my hon. Friend the Member for Gloucester received a number of representations on the matter. Undoubtedly, some

unforeseen grievances and injustices would have arisen if we had not attended to it, and so the provisions on vesting dates were brought forward.
As my hon. Friend said, clause 2 states the Bill's short title. The Government amended the clause in another place by adding a provision to the effect that the Bill will apply in any case where vesting day falls after the Bill has been passed. It will therefore come into force on Royal Assent.
I hope that the House will agree to the further amendment. Although hon. Members may be supporting amendments that appear somewhat complex to the Bill, I hope that the explanation I have given in response to amendments Nos. 1 and 2, the latter of which refers to the important matter of vesting, will provide some clarity on those complex issues. By introducing the amendment, as well as amendment No. 1, we have provided for a reasonably wide range of possible situations that could arise in the course of a building society conversion or takeover.
As I have already explained, the amendments do not attempt to deal with every possible anomaly. We have had to take care to have regard to the scope of the Bill and not to overload it with rafts of changes, which might have endangered its passage.
The Bill, as amended in another place, will, I believe, now cure by far the majority of real inequities that have been identified in connection with takeovers and conversions. I hope that the House will now allow it to complete its final stages without further delay.

Question put and agreed to.

Road Traffic (New Drivers) Bill

Considered in Committee; reported, without amendment.

Order for Third Reading read.

Dr. Michael Clark: I beg to move, That the Bill be now read the Third time.
The House will recall that the Bill is about new drivers. Although new drivers do not necessarily equal young drivers, the vast majority of new drivers are young. On Second Reading, the House was reminded that, although young drivers make up just 10 per cent. of drivers on the road, they are involved in 20 per cent. of road accidents and 25 per cent. of road fatalities.
The Bill is designed to achieve better standards of driving from new drivers, particularly young drivers. The Bill provides that any driver who gains six penalty points in the first two years of driving will have his or her full licence revoked and will revert to a provisional licence until such time as that driver passes another driving test.
I was grateful to the House for its unusually warm reception of the Bill on its Second Reading on 3 February. I am also grateful for the support that I received from many organisations, notably the Automobile Association and the Royal Automobile Club, from the Metropolitan police and other police forces. Many individuals, in particular, the parents of learner or newly qualified drivers, have also expressed their support. I have received many letters of support from my constituents and others in south-east Essex, as well as from people throughout the country.
I received an anonymous letter from one mother who does not live far from my constituency. As you will know, Mr. Deputy Speaker, hon. Members do not often take notice of anonymous letters, but I did on this occasion. She told me that her daughter, who had recently passed her driving test, had abandoned almost all the driving skills that she had been taught by her driving school and that she was unhappy with her daughter's driving style. The mother was unable to persuade her daughter to change that style and she thought that my Bill, which would subject that young lady to the threat of reverting to being a learner driver should she get six penalty points, would act as a good deterrent. One can understand why that mother wrote that anonymous letter—she did not want to be identified in case her daughter found out.
This is the first time that I have introduced a private Member's Bill and I dare say that the experience that I am about to relate is not unusual. When I presented the Bill on Second Reading, especially after the approval it received, I was convinced that it was perfect in every respect, or at least as close to perfection as any Bill can be in this imperfect world. As the weeks have gone by, various small matters have been drawn to my attention. I discovered that, in one or two fairly minor respects, the Bill was not quite as perfect as it might be. Putting right what I took to be one or two small matters has proved to be quite a complicated exercise mainly because, although the ideas behind the Bill are quite simple, the existing law on driver licensing and endorsement is remarkably complex.
Hence, we had an eventful couple of mornings, on 5 April and 19 April, in Standing Committee C in the course of which the Bill acquired no fewer than 50 amendments,

all tabled either by me or by my hon. Friend the Minister for Transport in London, whom I thank for his co-operation and assistance at every stage of the Bill's passage. Although there were many amendments, they covered only three main issues, but for the three major changes to come into effect, a vast number of consequential amendments were needed in other parts of the Bill. In the circumstances, it was just as well that nobody else saw fit to table amendments in Committee. If they had, we should certainly not have been ready for the Report stage today.
For the benefit of hon. Members who were not members of the Standing Committee and who have not had time to digest the Hansard reports, I had better begin by explaining briefly the purpose and effect of the amendments that were agreed in Committee. They were all intended to improve the drafting of, or to close possible loopholes in, the original Bill. None represents a change in the original policy. Indeed, the Committee was remarkably unanimous in supporting that policy, reserving its criticism for points of detail. Those criticisms, from hon. Members on both sides, were constructive and helpful, and I thank all members of the Committee for that.
The first of the issues is what to do about the awkward squad who do not produce licences in court when required to do so, either because they have genuinely lost them or because they think that they will gain some advantage by keeping them tucked away for some other day. In its original form, clause 2 required the court to send the licence to the Secretary of State for him to revoke it, as he would have the power to do under clause 3. If people did not produce a licence, the Secretary of State could not revoke it. On the face of things, that seemed reasonable enough, but the provision rested on the assumption that the court would get hold of the licence at some time.
The courts have ample powers to get hold of licences under existing legislation, so I did not think that there was a problem. Section 7 of the Road Traffic Offenders Act 1988 requires a person who is prosecuted for an endorsable offence to deliver or to post the licence to the court clerk so that it is available the day before the hearing or to have it with him or her at the hearing. Section 27 of the same Act requires the licence to be produced to the court, if the court does not already have it, so that it can endorse it at the time of any conviction. Under this section, failure to produce a licence without good reason when required to do so is an offence that carries a level 3 fine up to a maximum of £1,000. Moreover, if a person fails to produce a licence when required to do so under this section, the licence is suspended and is of no effect, therefore, until it has been produced.
However, real life is not quite as simple. As my hon. Friend the Minister explained in Committee, the courts frequently face the choice of adjourning the hearing until they have got hold of the licence or proceeding without it. Different courts will handle that problem in different ways. Hon. Members who served in Committee with me will remember that my hon. Friend the Member for Batley and Spen (Mrs. Peacock) left the Committee in no doubt of the robust approach that she took during her time as a magistrate.
Given the pressure of business, and the nuisance of adjournments to all parties concerned, the increasing tendency is to get a print-out of the licence record from the Driver and Vehicle Licensing Agency, which gives


the courts all the information that they need to proceed with the case without seeing that licence. Indeed, as my hon. Friend the Minister for also said, the print-out is often more accurate than the licence, giving details of convictions which were never endorsed on the licence because it could not be produced or was not produced—wilfully probably.
Of course, if the courts do not get hold of the licence physically, they cannot send it to the Secretary of State and he cannot revoke it. So we need, so to speak, a metaphysical or theoretical equivalent of sending a licence back. The courts simply notify the Secretary of State of the circumstances of the case, sending the licence, if they have it, so that it does not return to the offender. Even if the courts did not have the licence to send, the Secretary of State may revoke it and also has the right to get it back from the offender. That is not really putting a new burden on the courts because they have to send such information to the Secretary of State in any case, whenever they endorse a licence.
That seemed a simple enough change, but it required a large number of amendments, partly because there were several different references in the Bill to sending a licence and partly because, with more than one kind of notification, we need to be more explicit in our use of terminology. That large batch of amendments was duly voted into the Bill, mainly into clauses 2 and 3, which are the heart and soul of the Bill, but also into clause 9, which deals with interpretation and schedule 1, on which I shall say more in a moment.
As a result, it is now possible for the Secretary of State to revoke a licence even without it coming into his possession, although no doubt the DVLA will do its best to get hold of it, even if it has to require the help of the police, as I believe quite often happens at present in cases of disqualifications and so on. More importantly, the changes mean that an offender cannot avoid the licence being revoked simply by pretending that he or she has lost it or by not producing it when asked. That means that we have closed what could have been quite a serious loophole.

Mr. Quentin Davies: I thank my hon. Friend for giving way while he is on that precise point. His Bill refers not merely to licences issued in this country but to those issued in other countries, especially other European Union countries with which we have reciprocal arrangements, which means that such licences are valid in this country. Clearly such licences can be endorsed, but will he explain how they can be revoked? Will he explain whether there is an alternative? Perhaps we may use the same system. Will he explain the procedure followed when someone with a licence issued by another EU country says that he cannot find it, that he has lost it and that therefore it cannot be sent to the issuing authority to be revoked? Is there an equivalent of the print-out from the DVLA to which we refer in this country and are procedures in place to enable courts in this country to receive documentation from the relevant continental authorities in the country in which the licence was issued?

Dr. Clark: My hon. Friend asked a lot of questions, but I shall do my best to answer them. Let us take them one at a time. First, various licences are completely exchangeable for UK licences—those from, among other places, the Isle of Man, the Channel Isles and Gibraltar.

If they are exchanged for a British licence, the date on which the test was passed is shown and therefore a probationary two-year period may be identified. My hon. Friend need have no concern on that score. Other countries in the European Union and European Economic Area have an understanding that licences can be exchanged. More importantly, on 1 July 1996, a European directive will be implemented to provide a common format for all licences in the European Union and in the economic area. It will include the date on which the holder passed his or her driving test and will therefore identify the 24–month probationary period. That licence will fit nicely with my Bill's provisions.
My hon. Friend asked also about a person with a European licence who wilfully or forgetfully does not produce his licence in court. I am a little less certain of my ground in that regard. The situation may be difficult between now and July 1996, but when the European model licence is introduced—even countries outside the orbit of the European Union are adopting it as the ideal model—the same provision should exist for notifying the central licence agencies in European countries that a licence has been endorsed, so that endorsement would be effective. I will conclude my replies to my hon. Friend, because I believe that my hon. Friend the Minister wants to be helpful.

The Minister for Transport in London (Mr. Steve Norris): It is slightly unusual to intervene at this stage in the debate, but my hon. Friend the Member for Stamford and Spalding (Mr. Davies) makes an important point. At a time when licences are increasingly used in various European Union countries, it seems sensible to apply UK law to someone who holds a French licence. At present, that is not easy to do. The French presidency expressed interest in harmonising European law so that there could be common understanding of offences for which a licence could be withdrawn. It is not for the British Government to withdraw a French licence. The French Government would withdraw the licence of a French licence holder, but acknowledging that an offence had been committed in Britain of a type agreed to be commonly regarded as dangerous. The British Government have been generally supportive, while recognising the great disparity of views throughout the EU of what constitutes an offence and of the treatment of offences. We cannot move immediately to a concrete proposal, but there is room to thrash out the concept of a Europe-wide scheme.

Dr. Clark: I hope that my hon. Friend the Member for Stamford and Spalding (Mr. Davies) feels that 95 per cent. of his points have been answered. He leaves 5 per cent. doubt in our mind, and we must take account of that cautionary note. My hon. Friend's intervention was timely because I had just finished my first main point.
The second main issue is of marginally more importance than the first, but in terms of amendments it caused us much more trouble in Committee. It concerns a group of drivers that I had rather overlooked when the Bill was drafted. The main part of the Bill deals with the straightforward case of a qualified driver who has passed his driving test and has exchanged his provisional licence and driving test certificate for a full licence, on which he is now driving.
Schedule 1 originally modified those provisions to deal with the case of a qualified driver who has not yet exchanged his test certificate and still holds a provisional


licence, so taking advantage of the two-year period of grace allowed in section 89 of the Road Traffic Act 1988, whereby a test certificate retains its validity and can still be exchanged. However, the original schedule 1 did not cover drivers who have passed the test in one class of vehicle and obtained their full licence, but have later passed a test in another class of vehicle and have not exchanged their pass certificate for the second test. There could be two or three tests if people have taken tests in two or three categories.
When we first considered that issue, those drivers did not appear to be so much of a problem as the ones with provisional licences only. At least they would have a full licence, with a date of entitlement on it, to show the court or fixed penalty clerk that they continued to be in their probationary period—or not, as the case may be. However, it gradually transpired that, if those drivers held an extra test certificate, there was the danger that they could abuse the system.
Let us take as an example the case of a person who obtained a full motor cycle licence and then passed a car test, but did not exchange the test certificate. Let us suppose that that driver has his licence revoked as a result of receiving six penalty points. The court returns the licence to the Secretary of State, but, as the Bill was originally drafted, the driver would not be obliged to produce the test certificate to the court. Indeed, the court would have no reason to know that he had one.
The driver then obtains a provisional licence under the Bill, because the full licence for the motor cycle was revoked. However, let us suppose that, by that time, he is not interested in driving motor cycles any more; he has had his period of driving motor cycles and he is far more interested in driving a motor car.
So the driver has lost his full motor cycle licence; it has been turned back into a provisional licence. However, he then has in his hands a provisional licence that comes from his downgrading of the motor cycle licence, plus the test certificate that he received for passing his motor car test. He realises that he continues to have the unexchanged certificate for passing his car test, so he sends that off, with his provisional licence, to apply for a full car licence.
As the Bill was originally drafted, the agency would arguably have had no option but to give the driver a full car licence, or at least would have had no right to refuse him one, so he neatly could have avoided being retested, as long as he did not take up motor cycling again.
Obviously, that was not right, so I had some amendments drafted. However, I had not anticipated that that involved rewriting almost all of schedule 1, which now appears very different from the original schedule 1. The difference in real terms is not great. It is simply that a new set of circumstances are catered for as well as the original set. However, the result is that we now have a most impressive-looking schedule 1 in five parts.
Hon. Members who have a copy of the Bill will notice that the five parts are as follows. Part I is a general part. Part II imposes a duty to provide a test certificate. Part III concerns newly qualified drivers with provisional licence and test certificate. Part IV concerns newly qualified drivers with full and provisional entitlements and a test certificate. Part V contains some of the supplementary

explanations and provisions of the schedule. It has become quite a different schedule as different categories of drivers have become subsections of that schedule.
The third set of amendments, on which I shall not detain the House long, concerns the procedure that is used when the person threatened with revocation of his licence has a temporary stay of execution, if I may call it that, while an appeal is pending against the court decision that led to his receiving six penalty points, or when he receives a permanent reprieve by having his points reduced or eliminated on appeal—in other words, when the appeal is successful.
All those matters are dealt with in clause 5, and the amendments that were moved by my hon. Friend the Minister were about matters of detail, to adapt the powers better to current practice. They make no fundamental change to the principle. One or two small drafting amendments were made in Committee to clarify matters that might have been a trifle ambiguous. I shall not dwell on them as they are not of consequence, but have tidied and improved the Bill, which now reads better.
The important thing is that we had a successful Committee stage; the Bill returns to the House much improved as a result of the detailed scrutiny given to it by the hard-working members of the Committee. I am grateful to all members of the Committee, on both sides, for their patience and assistance. I am particularly grateful to my hon. Friend the Member for Southampton, Test (Mr. Hill), who chaired the Committee so admirably.

Mr. Piers Merchant: I shall not speak for long as I had the opportunity to speak on Second Reading and served on the Committee that considered the Bill.
I think that the House knows that I give my hon. Friend the Member for Rochford (Dr. Clark) my full support, both for the theory behind the Bill and its practice. The House also knows of my admiration for the way in which my hon. Friend introduced it and piloted it through to this stage.
I shall sum up my main reasons for supporting the measure. Its main purpose is to help to avoid accidents. It is a road-safety measure, primarily aimed at cutting the carnage on our roads. It must be viewed in the context of accidents and what causes them. There are many reasons for accidents, some of which are impossible to categorise, but accidents can fall into three main causative areas: drink, speed and inexperience.
Other measures have, to a large extent, tackled the problems caused by drink driving. Today, while it still remains a problem, it is much less of a problem than 10 or 20 years ago. That shows that legislation, when carefully targeted to deal with a cause of accidents, can reduce the accident toll.
The second main causative factor is speed. Steps have been taken to resolve that problem, but I hope that in future the House will take further action to deal with the horrendous problems that can be caused by irresponsible drivers who regularly exceed the speed limit. Anyone who drives on our roads can see the risk, the threat and, ultimately, the disasters that can be caused by excessive speed.
The third causative factor, which the Bill principally seeks to deal with, is the risk posed by inexperienced drivers. That is not to say that all newly qualified drivers are a risk; many prove to be careful, responsible drivers who do not have accidents. But a large proportion of accidents happen where a newly qualified driver—a driver with only two years' experience following the passing of his or her test—is either the cause of the accident or in some way involved.
The Bill ably seeks to minimise that problem, but it must be viewed alongside other measures that have recently been taken and will be taken in forthcoming years to deal with the specific problem. It must be viewed alongside greater education, tighter testing and the introduction of the theory test, which is imminent.
The next question that must be asked is: does the Bill successfully answer the tests that I have just set? The theory would suggest that it would meet those tests because theory is bound to lead one to conclude that any driver who has only recently qualified is bound to pose a risk as he is bound not to be as experienced as a driver who has driven on the roads for many years. That theory is also true in practice. To quote just one of the many statistics on the subject, one quarter of all fatalities result from accidents involving a new driver.
Statistics show that young drivers pose specific risks, but my views on the subject differ somewhat from those of several hon. Friends and I shall deal with the issue later in my speech.

Mr. Norris: I take the opportunity to point out to my hon. Friend the Member for Beckenham (Mr. Merchant) that, ironically, it is 25 per cent. of young drivers, rather than new drivers, who are likely to be involved in fatal accidents. It is important to make that distinction and I am interested to hear what my hon. Friend will say on the subject.

Mr. Merchant: I accept what my hon. Friend the Minister says; I should have been more specific in my comments.
It is difficult to distinguish whether those accidents are caused by inexperience or youth because, by definition, a young driver will be newly qualified because one cannot get a licence before age 17. I will return to that point later in my speech.
The Bill deals not only with accidents—I sometimes wonder whether "accident" is the right word to use, because there is always a clear cause and disaster may be avoided—but with bad driving. Therefore, it will make our roads safer while making the experience of driving more pleasant. All drivers would agree that good driving practices would lessen the physical danger to life and limb associated with that activity as well as make driving more pleasurable, relaxing and acceptable. One realises how stressful and unacceptable driving can be when one drives in other countries where bad driving seems to be endemic.
A second benefit of the Bill is that it will make driving in this country more enjoyable, which I think should please all drivers and pedestrians.
The Bill will take reasonably newly qualified drivers who demonstrate poor driving practices off the roads as solo drivers. They will return to learner status and, when they do drive, they must be accompanied by an experienced driver. That practical effect of the Bill will prove extremely beneficial. The accumulation of six

penalty points will demonstrate that, in one way or another, a driver is not behaving appropriately when in control of a vehicle on our roads.
Unfortunately, to that extent, the Bill will have the effect of locking the door after the horse has bolted as its provisions will apply only after a person has demonstrated that he or she is a bad driver—indeed, an accident may have already occurred.
More important, I believe that the Bill will act as a deterrent. It will become absolutely clear to all newly qualified drivers that they must exercise great caution because they face an additional penalty that does not apply to more experienced drivers—the loss of the ability to drive alone. I think that that deterrent is the more important of the Bill's effects.

Dr. Michael Clark: I am very interested in my hon. Friend's remarks. Does he agree that part of the deterrent to which he refers is the humbling of the macho male who will be forced to return to L-plates and ask auntie to sit beside him when driving?

Mr. Merchant: My hon. Friend has anticipated the third point that I was about to make. He is absolutely correct: that is an extremely important effect. Both of those effects will act as deterrents to bad driving and our principal aim must be to prevent accidents from occurring. By creating a probationary period—a significant new introduction—for newly qualified drivers, we are also telling them very clearly that they are not the same as fully qualified and experienced drivers. We are creating a third, in-between category of driver.
There would be, on the one hand, the learner driver who is protected—or rather, from whom the rest of the public is protected—by virtue of the specific requirements of being a learner driver, including having an experienced driver sitting next to him or her. The second category, which also already exists, would be that of the fully qualified driver, but we would insert between those two a third category of probationary drivers—those who are allowed to drive alone on the road but who must do so bearing in mind the fact that they will be treated differently by the law if they go wrong.
The point made by my hon. Friend the Member for Rochford is absolutely valid. The sort of people who previously felt the sudden thrill and exhilaration of being free after they had passed their test would know that they were not entirely free, but were being watched by the law and kept in that slightly controlled status. They could not behave as if they were unencumbered, as they would be able to once they had passed through their two-year probationary period.
I do not want to make heavy weather of the issue, but I shall return briefly to the question of experience and age. I do not for one moment challenge the assumption, which is no doubt valid, that young drivers, by virtue of being young, pose specific forms of risk. We have rehearsed that argument at previous stages, and I do not propose to go through it again.
Nevertheless, I must sound a note of caution. The Bill is not specifically about imposing probationary periods on young drivers. A Bill could have been drawn up to achieve that effect, which could have been in the title and the clauses could have proposed specified age brackets. The Bill does not do that; it is about newly qualified drivers.


I accept that, by definition, most young drivers will be newly qualified, especially the under-20s, just because of the age limit for first qualification, so there is bound to be a close link between the two. However, I do not accept that the risk lies only among young drivers.
I wonder what the situation on the roads would be if most newly qualified drivers were over 50. One can envisage a different era in which that might be so. I suspect that we should still find that in the first two years of driving people would pose a much greater risk on the roads than they would after they had gained experience, because experience is so important in driving a motor car.
That is why it is right that the Bill deals with experience, and with a period of time after first qualification, rather than purely with age. It is important that when the Bill comes into practice people bear that fact in mind, and do not think that it is aimed only against young drivers. That would be both inaccurate and, I believe, wrong.
My hon. Friend the Member for Rochford spoke at some length about foreign licences, and I do not therefore propose to repeat any of his comments, except to say that the subject posed some severe problems in Committee and has not been entirely resolved because of the changing nature of international law in that regard. The mere fact, that the House is aware of that small potential problem means that it can be ably dealt with in future.
Another suggestion made in Committee, which must form an important part of the consideration of the Bill, is that it should go further and that some form of mandatory training should be imposed on those who fall foul of the two-year probationary period. In Committee it was decided that that was not appropriate, and I strongly endorse that opinion. It would be wrong to go further at this stage, because I believe that the Bill strikes the right balance.
There is a need for further measures in other areas of traffic law, but not in that respect at this stage, although, as always with the law, as the years progress and the impact of the new Act is felt, it may indeed be considered necessary to strengthen it in one respect or another.
I throw out one idea, merely as a suggestion at this point, that at some future date it may be desirable to consider some outward mark on the vehicles of probationary drivers to show their status. That system applies in some countries.
Finally, I believe that the Bill will be strengthened when there is greater enforcement of general road traffic law. Certainly the Bill will act as a deterrent, but its practical impact will depend on enforcement of the law. People have to acquire six points on their licences before triggering the measures in this Bill, and that will require the enforcement of existing road traffic legislation. Here I enter a plea to the Minister for more effective measures to enforce road traffic law. My constituents repeatedly make it clear to me that many of our good driving laws—laws against speeding and others—are often honoured more in the breach than the observance. Modern techniques such as speed cameras can make enforcement much more effective and cheaper, and can ensure safer and better standards of driving. That is why I hope, for the sake of this Bill, that further action will be taken.
I strongly support the Bill; I am pleased to be here to see it reach this stage. I often think that if as many people as are injured or killed on the roads suffered the same fate in any other area of life, there would be a tremendous outcry. We would not be here today to talk about this important, if limited, measure. There would be emergency sittings of Parliament to pass major laws if as many as 5,000 people died each year in rail accidents or air crashes—or in the construction industry or in the North sea. Imagine the fuss there would be, yet for some reason over the years we have become inured to high numbers of deaths on the roads.
The Minister and his predecessors have made huge strides in the past few years to tackle the problem. The death rate has consistently fallen even though traffic on our roads has increased. Year after year, ever more effective measures have been introduced as we have come to understand the causes of accidents and how they can be dealt with—drink-driving legislation is but one example of that.
I commend the Government's work, but today above all I commend my hon. Friend the Member for Rochford for introducing the Bill, because it is so significant in this regard. It is part of a pattern of legislation that has successfully helped to reduce the number of road accidents. For me, the Act cannot come quickly enough. The sooner it is on the statute book and in force, the better.

Mr. Eric Pickles: It is a great pleasure to follow that thoughtful speech by my hon. Friend the Member for Beckenham (Mr. Merchant), and to lend my support to my hon. Friend the Member for Rochford (Dr. Clark). I apologise for not being here for the Second Reading debate.
I have a great interest in this subject. I see my hon. Friend the Member for Chelmsford (Mr. Burns) on the Treasury Bench today. I recall that he introduced an analogous measure in respect of displaying learner plates during a probationary period, but I am sure that he would agree that this Bill approaches the subject in a better way.
My hon. Friend the Member for Rochford said that we had had to wait a number of years before seeing his first Bill. The wait has been well worth it. It is an important piece of social legislation which will make an enormous difference to British society and the way in which we drive. Perhaps hon. Members who preach social policies should bear it in mind that the way to change things is to apply a common-sense approach to everyday issues. Even though my hon. Friend, in Committee, had to watch his Bill being amended in a number of technical areas by my hon. Friends, it remains essentially simple and it will have a considerable effect.
The car is a great liberator. It has made an enormous change to the way in which we go about our everyday lives. Essex is the home of the motor car. It is where production of the first cars took place in this country. Cars are endemic in our society. With the growth of prosperity, two-car households are not the exception or the novelty that they were when I was growing up. They give people—particularly young people—a great deal of mobility and their first opportunity of independent travel.
I can remember when I was in the sixth form that a student who had a car was a novelty, but now we see car parks being extended in schools to accommodate pupils'


cars. We know that the cars that those young people drive tend to be older than the current production models. We know that one of the factors in the great reduction in the number of car fatalities has been the improvement in standards of motor vehicle construction. Last year, I was involved in a fatal car accident as a passenger. I know that I would not be here today had it not been for an air bag and for the safety that is integral to a new car. I walked away with superficial injuries, whereas 10 years ago I would undoubtedly have died.
We see young people with slightly older cars experiencing that first taste of freedom. The Bill seeks to ensure that that does not turn into a nightmare. I deliberately used the words "young people" because I want to take issue with my hon. Friend the Member for Beckenham. I think that there is a distinction. I have a relative, my auntie Marjorie, who—I am sure that she will not mind me saying this—was in her mid 60s when she passed her test. She took the test following the untimely death of my uncle and passed first time. She is a very safe driver. Having travelled with her from the beginning, I can see an enormous difference. She has gained experience, but she knew from day one what her limitations were. That is the distinction. She realised that she was not as competent a driver as someone of her age who had been driving all their life, and was cautious in her approach. I think that the residents of my old home town benefited from that. I would be quite confident to travel any distance with my auntie Marjorie, who is a formidable woman.
I know that P. G. Wodehouse had views on aunts. Undoubtedly he would have approved of my auntie Marjorie.

Mr. Peter Atkinson: Does she have a Ferrari?

Mr. Pickles: No, she does not have a Ferrari, but I am sure that she would handle one with great aplomb if she did.
My hon. Friend the Member for Beckenham was quite right about one point, and I commend it to the House: if the level of deaths that we are talking about, even though there has been a reduction, took place on one day in one place, there would be an outcry. Although there has been a considerable reduction—I believe that it is 37 per cent.—in car accidents since 1987—

Mr. Norris: Fatalities.

Mr. Pickles: My hon. Friend is quite right; I meant to say fatalities.
Although there has been a considerable reduction, we are talking in terms of about 80 fatalities a week. I have seen grief counselling up close. I can remember that, after the Bradford stadium fire, full resources were brought to bear on a community that was grieving, but road disasters take place in all our constituencies every week. The community is not geared up to offer the same help and counselling as we offer after major accidents. Family life is shattered by road fatalities. People never recover. I am sure that we have all seen in our constituencies the grieving parents of a young child whose life has been cut short, either as a pedestrian or as a newly qualified driver.
No doubt you, Mr. Deputy Speaker, are a frequent traveller on motorways; no doubt, on occasion, you stop at motorway service stations. One feature of them is that

they often contain a section with video games, and popular among those games is the opportunity to sit in a racing car or on a motor bike and attempt to go round a circuit. Another is to sit in the cockpit of a starfighter. I am sometimes amazed at the reactions of young people and their ability to drive a pretend car around a circuit with great skill: I could not do that.
However, there is a great difference between playing a video game and actually being behind the wheel of a motor vehicle. It is then that people learn that to avoid an accident they do not need the reactions necessary to fly a star fighter; they need the experience not to get into circumstances that make such reactions necessary. Good driving is courteous driving—it is knowing when to slow down; it is knowing not to travel too fast in snow, fog or rain. That knowledge comes only with experience.
I live close to the A12, near what is described as the Billericay shuffle. I am not referring to my hon. Friend the Member for Billericay (Mrs. Gorman), but to a roundabout just off the A12, close to my house. It is an unusual roundabout, but the major turn-off is not signposted until half a mile before it is reached. All too often, we see a car in the outside lane, sometimes with its lights on, travelling at speeds well above the permitted limit. The driver suddenly finds that he has to get on to the roundabout to go to Billericay. Accidents are avoided only because I and other drivers put a foot on the brake and allow the driver to get in. Quite often, that driver is a young person; sometimes he is not.
I cannot help but feel that such incidents would not happen so often if drivers had had the discipline over two years of knowing that if they did not obey the speed limits and show basic courtesy to others, they would lose their licences. The Bill will change behaviour because two years of having to drive in a certain way will create a habit that will stick with people for the rest of their lives.
My hon. Friend the Minister has the Chigwell motorway police control centre in his constituency. I had the opportunity to go out in a patrol car along a stretch of the M25 and the M11. Quite frankly, what I saw in just a couple of hours changed my view of how safe it was to drive on motorways. I saw inconsiderate driving, people exceeding the speed limit and people using mobile phones in a reckless manner, despite the fact that we were in a fully marked police car.
What brought it all home to me was what the police said when I asked what was the difference between travelling at 95 to 100 mph and obeying the speed limit. They told me to imagine that I was following a car that suddenly stopped, that I had to slam on my brakes at 75 mph and that I had managed to stop within an inch of the back of the other car. They said that if I attempted that from the same distance, but when travelling at 95 to 100 mph, when I was one inch from the back of the other car I would still be travelling at 75 mph. That is the sort of experience and understanding that my hon. Friend is dealing with.
I said that I thought that my hon. Friend was dealing with social change. As my hon. Friend the Member for Beckenham said, the proposal is on the same level as the breathalyser. I think that I started driving in 1967. I can recall people at public houses drinking far too much and taking their car on to the road. I remember the old song by Frank Sinatra in which he sang, "One for my baby and


one more for the road". It was regarded as a sign of manhood to swill back six or seven pints and still to take a lethal machine on to the road.
Such behaviour is now socially unacceptable. Although we will still find people prepared to drink and drive, their number is diminishing. Friends and acquaintances who have been convicted of drunken driving have one thing in common: they feel a deep sense of shame. That is what I mean by the change in social attitude.
We need to ensure that, if newly qualified drivers fail within the specified period, they feel shame and embarrassment at having someone next to them. We must also recognise, however, that they might live a lot longer because of that. If, having passed a test, people knock up six points within the short period of two years, they need to reassess the way in which they drive.
Those people will face something else that will change social attitudes: premiums on insurance. I am certain that a person whose licence is taken away and who must sit a new test will pay not only by feeling shame, humiliation and inconvenience, but by feeling it in their pockets, probably for the rest of their lives. I say to them, however, that it is better to feel it in their pockets for the rest of their lives than to hold their head in shame because they have killed someone through inexperience.
I have absolutely no doubt that because of the Bill there are people who will enjoy a full life who otherwise would not have done so. When the Bill reaches the statute book, it will be something in which he can rightly take considerable pride.

Mr. Harry Barnes: The hon. Member for Beckenham (Mr. Merchant) said that the Bill applies not only to young people but to older people, a point that I raised on Second Reading. The Bill's sponsor, the hon. Member for Rochford (Dr. Clark), said:
The hon. Member for Derbyshire, North-East (Mr. Barnes) pointed out that he is a non-driver and, were the Bill to come into law, he—a man of mature years—would be caught within its provisions if he were to apply for a licence. Despite that, he welcomed the Bill."—[Official Report, Standing Committee C, 3 February 1995; c. 1356.]
I welcome the Bill, but I do not welcome the methods by which it has been pursued. After I had been lucky in the ballot for private Members' Bills, I received a letter from the Minister. It asked me to introduce the Bill and stated:
The attached papers describe a Bill designed to improve the safety of new drivers by requiring those who offend to re-take their test.
It ended:
If you are interested in taking this up, please telephone my Private Secretary".
I responded by saying that I was broadly in sympathy with the Bill but that I would be introducing other measures. I thought that, if the Government would only arrange the business of the House better, they would not need to seek the assistance of left-wing Back Benchers in pursuing their measures. I am a bit unhappy that, although this private Member's Bill is entirely in order—I am by no means challenging the procedures of the House—it is a pseudo-private Member's Bill because it is a Government Bill in disguise.
Perhaps the Minister can also tell me why it took the Committee one hour and 40 minutes to deal with clause 1, when the promoter of the Bill has pointed out—

Mr. Deputy Speaker (Mr. Michael Morris): Order. The hon. Gentleman is straying from Third Reading. A Third Reading takes place after the Committee, so he cannot debate any element of those Committee proceedings.

Mr. Barnes: I am in favour of the Bill and I do not believe that anyone will speak against it. We could easily vote for Third Reading now—in fact, that could have happened earlier in the day. After all, the hon. Member for Gloucester (Mr. French) said that he did not intend to clog up the proceedings, so that the Road Traffic (New Drivers) Bill could advance.
I am concerned that the debates on clauses 2 and 3 of the Road Traffic (New Drivers) Bill, which were considered its the heart and soul, were dominated by entirely unrelated matters.
Although the Bill completed its Committee stage a week last Wednesday, it has reached the Floor of the House only today. It would have been technically possible—had the promoter so decided—to consider it last Friday. If he had done so, that would have left space for items—

Mr. Deputy Speaker: Order. We cannot debate now matters that affect the running of the House and the relative merits of one Bill versus another. The House is charged this afternoon with the Third Reading of the Bill and other hon. Members still wish to catch my eye to speak. I would be grateful, therefore, if the hon. Member for Derbyshire, North-East (Mr. Barnes) addressed just the Third Reading and nothing else.

Mr. Barnes: I intend to sit down shortly to enable other hon. Members to speak. My speech would have been shorter if I had not fallen foul of your rulings, Mr. Deputy Speaker.
Although I cannot say anything else about our procedural arrangements, they have caused such feeling that they have prompted a disability march this morning to the House from the home of the hon. Member for Rochford. I have been involved in that, which is why I have been going in and out of the Chamber.

Dr. Michael Clark: I hope that you might show me the same indulgence, Mr. Deputy Speaker, as you have shown the hon. Member for Derbyshire, North-East (Mr. Barnes), because I should like to explain that had my Bill reached the Floor of the House one week earlier, there would have been grave danger that the Carers (Recognition and Services) Bill could have been disrupted. No one wanted that.

Mr. Barnes: I am a firm supporter of that Bill, but I believe that if the Road Traffic (New Drivers) Bill had been considered last Friday, arrangements could have been made—

Mr. Deputy Speaker: Order.

Mr. Barnes: rose—

Mr. Deputy Speaker: Order. The hon. Gentleman heard my ruling: either he will address the Third Reading of the Bill or resume his seat.

Mr. Barnes: Professor Oakshott, the theorist of Conservatism, wrote a book entitled "Rationalism in


Politics" in which he said that Conservatives did not feel the necessity to speak. It is unfortunate that, on this occasion and on related ones, they have not adhered to that principle.

Mr. Peter Atkinson: I must disabuse the hon. Member for Derbyshire, North-East (Mr. Barnes), who haunts Fridays like a spectre at the feast. He claimed that his Bill, the Civil Rights (Disabled Persons) Bill, had not had proper time. I assure him that not all Conservative Members are in favour of the Road Traffic (New Drivers) Bill. I do not want to spoil the consensus in the Chamber today, but I must tell hon. Members that I have some serious reservations about the Bill. The hon. Member for Derbyshire, North-East, who has offended many of us by prompting demonstrations at the House by people who are persuaded that they will thus gain publicity, should consider that—

Mr. Barnes: Is that in order?

Mr. Atkinson: If I am out of order, Mr. Deputy Speaker, I shall return sharply to order. The Bill has laudable intentions; there is a real problem with inexperienced and especially with young drivers. However, there is a sense that the Bill comes out of the mould of "Something must be done. This is something so let's do it." That worries me. We often debate such Bills. on a Friday. We run the danger of introducing complicated and unnecessary regulation which, at the end of the day, may not achieve the desired result—which is, of course, an improvement in road safety, and especially an improvement in the driving habits, of young drivers. My hon. Friend the Member for Rochford (Dr. Clark), whom I compliment on steering through the Bill—he deserves great credit—could not have dreamt that it would be so complicated or that it would require no fewer than 50 amendments. However, at the end of the day, will the Bill achieve its objectives?
We have the salutary warning of the Dangerous Dogs Act 1991, which was passed because there was perceived to be a particular problem. It was pushed through the House to deal with the outcry in the press. As a consequence, we are left with a legislative muddle which will shortly have to be put right. I hope that the same will not apply to this Bill. I was surprised, therefore, that the Automobile Association and the Royal Automobile Club leant their support to the Bill. Those organisations are there to defend drivers from unnecessary regulation, yet they are underwriting a Bill that will impose on them unjustified regulation.
My hon. Friend the Member for Beckenham (Mr. Merchant) touched on a flaw in the Bill, which is that we are dealing with a question of youth, but also a question of experience, which is the particular difficulty. I give an example from my constituency, which is an agricultural one. Young men and some young women have driven all-terrain vehicles and tractors from an early age and they are fairly competent drivers when they take their driving test at 17 and upwards. There is no doubt that many young people are extremely dextrous and competent when doing the kind of driving required to pass the current test and I have no doubt that those young people will pass the future improved test. It is not difficult for them. Driving tests cannot be a test of maturity; they can be only a snapshot of the driver's competence on the day.
Here is the rub. Macho young men—let us be blunt and admit that that is what we are talking about—will not be put off by the idea that they may have to sit a driving test again. They will not see that as an awful insult to their manhood, but will simply book another test. In my part of the world, where the test centres do an excellent job, one can obtain a test within three weeks to a month if one is lucky. Within three weeks or a month of having to return their licence, these young men can sit the test once more and pass it with flying colours. When these young men drive cars, they may be reckless and irresponsible, as young men often are, but they are not incompetent; most are extremely competent drivers. We have, therefore, the problem that the Bill will not produce the desired result.
I was not a member of the Standing Committee, but I have read the reports and I note that some interesting research was carried out on the subject at Southampton university. It showed that the vast majority of the young male drivers studied rated their driving skills and driving safety as considerably above the average for their age group. This is the problem; they think that they are good drivers. My hon. Friend the Minister talked about his experience as a 17-year-old driver. When I passed my test, I was probably an extremely unsafe driver. I had a sporty car and I thought that I drove it extremely well. I have absolutely no doubt that I drove extremely recklessly, cornering at the limit of the car's ability and travelling far too fast, but it was in the nature of the young man. Therefore, I do not think that having to take my driving test again would be a distraction at all.

Dr. Michael Clark: While I am interested in hearing some of my hon. Friend's exploits as a young driver and his cornering on the limits of the car's safety, perhaps he should consider that someone who has fallen foul of the Bill's provisions and has to revert to being a learner driver would have Aunt Marjorie, the aunt of my hon. Friend the Member for Brentwood and Ongar (Mr. Pickles), in the car with him. I am sure that Aunt Marjorie would ensure that he respects the other road users and the limitations of his motor car and that he would not, for the few months during which he is once again a learner driver, be testing the patience of other roads users to the same extent as he otherwise would have been.

Mr. Atkinson: I heard exactly what my hon. Friend said, but I also heard the sedentary intervention of my hon. Friend the Member for Brentwood and Ongar, which perhaps the House did not hear. He said that when I started driving they had to have red flags in front of the car. I must deny that. Red flags had been abolished a few years previously. At the time, I would not have been a very good driver and I hope that I am very much better now.
I shall move on to another point, which causes me some agony: foreign drivers. I know that my hon. Friend the Member for Stamford and Spalding (Mr. Davies) intervened on the subject, but some questions are still up in the air. Perhaps I did not understand the answer of my hon. Friend the Member for Rochford or that of my hon. Friend the Minister. If, as an Irish citizen, I arrived in this country with an Irish driving licence—an EC driving licence—issued by the Irish Ministry of Transport, with which I was perfectly entitled to drive, and was called on by a British court to surrender that licence, would my


right hon. Friend the Secretary of State, who is the recipient of such licences, have the power to revoke that licence? I find that difficult to understand.

Mr. Norris: The position is very clear. A visitor to this country using a foreign driving licence would not be susceptible to the actions of the British courts. The Secretary of State has no jurisdiction over the issuing or re-issuing of Irish driving licences. My hon. Friend must remember that a person who is resident in this country is required either to take a test and acquire a licence, or to exchange their licence if it is exchangeable. He will know from the previous proceedings that even if a person has not yet exchanged their licence but commits an offence for which points can be endorsed, those points will be registered on the DVLA computer and can be added to the exchanged licence the minute that it is exchanged. Very few people indeed will fall outside the scope of the Bill, especially bearing in mind the fact that it applies only during the first two years in which someone acquires a valid licence.

Mr. Atkinson: I am grateful for my hon. Friend's clarification. I understand the matter slightly more clearly. What attracted my attention was that clause 1(3) specifically deals with Liechtenstein, which I find a rather curious legal anomaly. Since Liechtenstein does not appear to be part of the agreement, its citizens who are resident in this country and who commit an offence having passed their driving test more than two years previously will undoubtedly escape the provisions of my hon. Friend's Bill.
I took the trouble to go to the Library, and discovered that 27,000 people are resident in Liechtenstein; as most of it is mountainous, I do not think that that anomaly will pose a great threat to road safety in this country. One other interesting point about Liechtenstein, which I accept is totally out of order, is that it is one of the few states which has not—

Mr. Deputy Speaker: Order. If the hon. Gentleman accepts that the point is out of order—he is not allowing me to make a judgment—I hope that he is not even going to raise it.

Mr. Atkinson: I shall return to order. I am sorry to have to deprive the House of a little nugget of information that may have amused hon. Members, but I abide by your ruling, Mr. Deputy Speaker. I am grateful to be able to contribute to the debate.
I am not a great supporter of my hon. Friend's Bill, and I have concerns about particular aspects. Perhaps they will be raised in the other place. However, as my hon. Friend has worked hard on his Bill, I hope that it receives a fair wind in the other place. If it were shown over time that the Bill's provisions were not having the intended impact, the legislation could be presented to the excellent Select Committee on Deregulation of which I am a member, which could remove it from the statute book.

Ms Joan Walley: I will be brief because I am aware that the Minister has yet to comment and that the hon. Member for Rochford (Dr. Clark) will want to reply.
This is my first opportunity to congratulate the hon. Member for Rochford on his Bill, which has our full support. It is important that any measure to improve road safety and to reduce the number of casualties, particularly among young drivers, reaches the statute book.
The lottery of private Members' Bills greatly concerns the Labour party. Road safety proposals should be presented to the House in an integrated way, and the Third Reading of this Bill should be part of such a framework. I do not want to stray out of order, but time after time on Fridays it is not possible fully to deal with Bills of the sort introduced by my hon. Friend the Member for Derbyshire, North-East (Mr. Barnes).

Mr. Deputy Speaker: The hon. Lady may not want to stray but she is doing so. I urge her to return to the Third Reading of the Bill before the House.

Ms Walley: I will endeavour to keep in order, Mr. Deputy Speaker, but making time available to deal properly with Friday Bills is a matter of concern.
The hon. Member for Brentwood and Ongar (Mr. Pickles) spoke about alcohol, speed and inexperience. Great progress has been made in dealing with drink-driving, but there is no increasing concern about the effect of speed. It is important to get rid of the macho image and to instil in young people in particular the importance of safe driving. I am all in favour of that being done in schools' road safety education and as part of the probationary licence procedure.
I regret that the Bill is being presented piecemeal rather than as part of an integrated approach. Its value has been amply demonstrated by the hon. Member for Rochford and by the Automobile Association, which perhaps played a large part in its drafting. The AA, as a representative of drivers' interests, should play a role, and I recognise its contribution to the Bill. I acknowledge also the support given by the parliamentary advisory committee on transport safety. It is concerned that the re-test should be a different sort of test. Perhaps we may consider that at a later stage.
Hon. Members who served on the Committee demonstrated the value of the Bill, which is appreciated by the general public, our constituents and anyone who has been involved in a terrible tragedy caused by irresponsible driving.
The need for the Bill has been demonstrated by statistics. I shall now introduce a controversial aspect into the debate because I notice that, on Second Reading, the Minister justified the support for the Bill on the grounds of the results of important research that had been carried out by the Transport Research Laboratory.
I bring to the Minister's attention the fact that, on the day that he made those comments—3 February 1995—in the same edition of Hansard as the Second Reading debate there was a reply to a parliamentary question that I had tabled, which stated that the Government are making considerable cuts in the number of people employed at the Transport Research Laboratory to do that very important research work.
All hon. Members know that that invaluable organisation, the Transport Research Laboratory, is in the process of being privatised. Where would we be if its important research had not been carried out? I have grave anxieties for the future as a result of that idiotic privatisation proposal, with which the Government are proceeding.
It would be wrong of me not to refer to the sterling work that has been done in another place by Baroness Barbara Castle, who set up the Transport Research Laboratory. Her foresight has given us so much anxiety about the extent of road accidents and so on, and it is important that we support her campaign to retain the Transport Research Laboratory.
Many important issues were mentioned in Committee to which I wish to refer on Third Reading, one of which is the theory test. I should be grateful if, when the Minister replies, he would enlighten us about the most recent position regarding the theory test. Some time ago, the then Secretary of State for Transport, the right hon. Member for Norfolk, South (Mr. MacGregor), promised new proposals that would harmonise us with Europe in respect of the proposed theory test. I am still not sure what the theory test will be. I am not sure when it will be introduced and when we shall have an opportunity to debate it.
That subject is relevant to the present debate, because we are discussing driving licences. I hope that the Minister will enlighten us about that and deny categorically that there is any truth in newspaper reports that the Government are backtracking on a new theory test.
I should mention the argument made to me by my hon. Friend the Member for Ogmore (Mr. Powell) about motorway driving. We must carefully consider the way in which new drivers and young drivers are properly prepared to drive on our motorways and the scope that exists in the current test, or in the retesting that will take place, to ensure that people are capable of motorway driving and properly prepared to undertake it.
Other issues were mentioned in Committee. There was discussion about whether two years was the right probationary period and whether it should be longer or shorter. The issue of whether we are concerned with new drivers or young drivers also arose, and has been amply covered in the debate that we have just had.
Another issue that was mentioned in Committee was the form that our driving licence should take. I refer specifically to the debate that took place with my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) about licences and counterpart licences. We shall need to return to that subject, and it would have been better if we had had an integrated measure so that we could clear all the anomalies in respect of future European harmonisation now, rather than later.
Finally, there is the issue of the way in which people are prepared for driving tests. I bring to the attention of the House further replies that I have received to my parliamentary questions, which show that a very large number of days is lost as a result of sickness of examiners employed by the Driving Standards Agency. In 1994, about 29,965 days were lost as a result of examiner sickness. That is an important statistic because it has a great bearing on the way in which we prepare people for driving tests and then ensure that, having passed their test, they are able to drive vehicles safely.
With those few comments I should like to repeat that we support the Bill. However, I regret that we do not have an integrated framework to address the serious issue of road safety.

The Minister for Transport in London (Mr. Steve Norris): I shall first pick up on the last point made by the hon. Member for Stoke-on-Trent, North (Ms Walley), who leads for the Opposition on these important matters. She advanced an astonishing proposition. She is critical of the Bill on the basis that it is a piecemeal, not an integrated, measure. In my experience words such as "integrated" are among the most dangerous in the English language. I know that an integrated transport policy means any transport policy other than the one being practised by the Government of the day.
I shall pass over that matter and merely record that when the hon. Lady talks about the measure being piecemeal and not integrated, it is clear that she does not have the vaguest idea what she is talking about. She referred to the desirability of incorporating legislation on counterpart licences. In Committee, the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) referred to that subject while relying on the patience of the Chairman. There were those of us who, in our untutored way, thought that those observations might be well out of order, but my hon. Friend the Member for Southampton, Test (Mr. Hill) is a generous man and he allowed the debate to continue.
I make that point merely to observe, in parenthesis, that the notion that any delay on the Bill was brought about by Conservative Members is exploded once one realises that in the last few seconds of the Committee stage, at about quarter to one, the hon. Member for Thurrock (Mr. Mackinlay) popped up, having deigned to visit us for a few seconds—

Mr. Deputy Speaker: Order. As I have already said, we cannot discuss today what happened in Committee. We must get on to the subject of Third Reading, however tempting it may be to reflect on the Bill's Committee stage.

Mr. Norris: I beg your pardon, Mr. Deputy Speaker. When one hears nonsense such as that spoken by the hon. Member for Derbyshire, North-East (Mr. Barnes), it is intolerably difficult to restrain oneself. However, I understand that I cannot respond except to say how much of the responsibility for the Committee proceedings lay with Opposition Members.
I shall return to the subject of counterpart licences. The hon. Member for Stoke-on-Trent, North is effectively saying that we should never legislate. The hon. Lady describes as piecemeal the current process whereby measures that will improve road safety and save lives can be brought before the House. The excellent measure introduced by my hon. Friend the Member for Rochford (Dr. Clark) has been taken so far through the House, but the hon. Lady says that we should not proceed with it until we are ready to proceed on counterpart licences, which is likely to be years away. If that is what the hon. Lady means by integrated, I should like to be the first Transport Minister to say that, in that respect at least, I do not want an integrated policy. I want very little of what the Opposition have to offer on Transport, but I certainly do not want that definition of an integrated transport policy.
The hon Lady's reference to an integrated transport policy was about as relevant as her remarks on the Transport Research Laboratory. Even before you, Mr. Deputy Speaker, invite me not to do so, I shall not proceed to debate the merits of privatising the Transport Research


Laboratory. Even if the hon. Lady's comments had been relevant, which they were not, they were utterly outwith the scope of the Bill. That laboratory is an excellent organisation and will no doubt continue to do excellent research, much of which will be funded by the Department.
The hon. Lady made a number of points about the theory test—about its adequacy and about announcements. I can confirm that my right hon. Friend the Secretary of State for Transport will be making an announcement about the theory tests, which is an important one of the four planks of our policy for new drivers—

Ms Walley: When?

Mr. Norris: We shall shortly be able to do that. If the hon. Lady imagines that it is a matter of no consequence that can be disposed of in a few minutes, that shows how unfitted she and her hon. Friends are for office.
I have searched the Bill and found not the slightest reference to theory testing. On that basis, it seems that it is an alleyway down which I should not proceed. It would be equally inappropriate for me to debate Driving Standards Agency absenteeism. It has come to a pretty pass when speakers who should address such matters as retesting new drivers attempt to tie in such concepts as absenteeism among DSA staff. That shows massive generosity on your part, Mr. Deputy Speaker.

Ms Walley: I am grateful to the Minister for giving way. Will he inform the House when he intends to introduce new measures about theory tests for drivers?

Mr. Norris: As I have said, my right hon. Friend will make an announcement about the theory test in due course. I am aware of the hon. Lady's propensity for making trouble and for spreading despondency when none is justified, so I make it quite clear that theory testing remains an important part of our armoury of measures in relation to new drivers. In any event, it is a requirement of the second European Community driver licence directive, as she should appreciate. We will bring forward our proposals in due course; we will certainly not be rushed into doing so by the hon. Member Stoke-on-Trent, North or by any of her hon. Friends.
I say to the hon. Member for Derbyshire, North-East that perhaps it is best to view legislation of this sort from the perspective of a left-wing non-driver, which is how he described himself. I am not entirely sure whether "left-wing" relates to the fact that we drive on the left-hand side of the road in this country or whether it has political connotations. The implications of his statement have escaped me on previous occasions and they do so again today. It is the hon. Gentleman's practice in such matters never to be confused by the facts and, if possible, to talk from a position of total inexperience, because in that way he may indulge in the greatest flights of fancy.
The Department of Transport has welcomed the concept of the Bill. The Government are constrained in the amount of time available to introduce Bills of this sort, so we are very grateful to my hon. Friend the Member for Rochford for his initiative and for the work that he has done in introducing the legislation. Its passage has not been easy—as he said, there have been a large number of amendments.
In addressing the points made by my hon. Friend the Member for Hexham (Mr. Atkinson), I suggest that there is no danger of the Bill meeting the fate that might have been accorded to the excellent Dangerous Dogs Act 1991. As former parliamentary private secretary to the then Home Secretary, my right hon. Friend the Member for Mole Valley (Mr. Baker), who performed excellently in that role, I have yet to be persuaded that that is not extremely useful legislation.
More to the point, this legislation was agreed throughout the Committee stage. Furthermore, and more importantly, it is not likely to be drawn to my hon. Friend's attention as a deregulatory measure. My hon. Friend should understand that, to the Government, deregulation has never meant any reduction in safety standards or in standards of consumer protection. Labour Members often allege that, when we deregulate, we automatically reduce safety standards. The Government have always made it clear that safety is one of our most important priorities.
I suggest to my hon. Friend that we are not performing the role of a good deregulator—that is, removing unnecessary legislation; eliminating unnecessary burdens on business is the principal function of deregulation—but are putting on the statute book legislation that will save lives. As an innate deregulator, I have no difficulty with that concept.

Mr. Peter Atkinson: I thank my hon. Friend for giving way. I remain concerned that the legislation will not achieve its objective. If it fails to influence the behaviour of young and inexperienced drivers, my point is that it must then be removed from the statute book.

Mr. Norris: I have no objection to the concept that if the Bill proves ineffective—I stress the fact that in my view and in the view of every professional organisation involved, that is extraordinarily unlikely—the first to want it removed would be my hon. Friend the Member for Rochford. Nobody is in the business of clogging up the shelves with additional legislation that has proved ineffective. However, it is true that my hon. Friend's point goes to the heart of the Bill.
My hon. Friend the Member for Beckenham (Mr. Merchant), in a thoughtful and helpful speech characteristic of his approach throughout our proceedings on the Bill, drew attention to the essential difference between an experienced new driver and a young driver.He said that there were two types of new driver—inexperienced drivers who, like Aunt Marjorie, the aunt of my hon. Friend the Member for Brentwood and Ongar (Mr. Pickles), are no longer young, although they may be still in their first flush, and those who are both young and inexperienced.
We should not detain ourselves long on the issue, because, throughout the debate, the essential points have been made. My hon. Friend is right that the hallmark of inexperienced but mature drivers is an awareness of their own limitations. Because such drivers are more responsible, they tend to drive within those limitations. I agree that, statistically, they represent a significantly lower risk than young drivers in terms of their propensity to cause accidents.
My hon. Friend also made a point that has emerged throughout our proceedings—that young people are extraordinarily adept. Their reactions are fast and they are good at handling the vehicle itself. That is precisely what


my hon. Friend the Member for Beckenham said, but what is wrong with that category of driver is often the attitude, not the technical competence.
Often, part of young drivers' attitude is a belief that they can drive on water, that they are utterly immune from any propensity to have an accident and that they know everything that there is to know about driving, despite the fact that they have held a licence for only five minutes. They tend to believe that they can control their vehicle in all circumstances, whereas the more one drives, the more one realises that that is never true, even with a car that one knows extremely well.
I suspect that the Bill was principally aimed at that distinction. My hon. Friend the Member for Rochford decided to call it the Road Traffic (New Drivers) Bill, and I have no difficulty with his definition, but its important feature with regard to young drivers is that it talks in terms of attitude. The AA has introduced a questionnaire for new young drivers designed to make them confront their attitudes and to try to ensure that they approach driving as a serious business.
My hon. Friend the Member for Beckenham referred to the concept of the macho young driver, and it was the deliberate intention of the Bill that young people should face the consequences if they build up unnecessary points. They will have to go back to first base, sit next to someone else when they want to go out, display L-plates and put up with their friends sniggering behind their hands. I suspect that most young people would consider that a fairly serious consequence.
I must make one thing clear, however. My hon. Friend the Member for Rochford wanted to avoid looking as if he was merely applying unreasonable pressure to young people. He could have drafted a Bill which said, for example, that if a young driver had accumulated any points in the first two years he or she should go back for a new test. He could have attempted to introduce a three-year term, but one with a lower number of penalty points—for example, six or even nine points in three years. He did not do that. Instead, he quite properly decided that this measure will have limited application, to a number of new drivers. It will be a useful deterrent in the context—it is crucial—of changing people's attitudes.
My hon. Friend the Member for Hexham, a noted cynic, appears to be equally cynical about the effectiveness of the Bill. I am prepared to give it a fair go. It may be of interest to him to know that many countries in Europe and beyond place restrictions on new drivers. Some countries hold such powers in reserve as long as those drivers generally behave themselves. That is what we intend to do here. Other countries again make use of probationary plates. Regardless of whether the new driver has committed an offence, he has to carry a plate denoting his lack of experience. The theory is that that helps other road users.
We have looked at the one place in the United Kingdom where the idea is already in force: Northern Ireland. There, people have to use an R-plate—it stands for "restricted"—meaning that the driver is subject to a speed limit. It has been in force already for about 25 years. We are evaluating research done by Queen's university, Belfast on whether the idea would benefit the rest of the United Kingdom. There are difficulties with establishing what the status quo ante was, because the number of

accidents then was not in the minds of those who introduced the legislation in the first place. However,' the Government's mind is not closed to the proposition.
Almost everyone involved in road safety issues recognises that it is vital to deal with new and inexperienced drivers. This Bill is only one of four measures or ideas that we intend to introduce. First, there is the theory test, to which the hon. Member for Stoke-on-Trent, North, like us, attaches a great deal of importance. Then there is the Pass Plus idea, designed to help newly qualified drivers to obtain better experience—and, incidentally, lower their insurance premiums. Thirdly, there is the 16-plus pack, available in schools for young people who are about to become drivers. Those three positive measures are to be allied to this one—which is the stick that accompanies the carrot, and which suggests that it may be necessary on occasion to invoke the notion that there is a price to be paid if a young driver is given to a little recklessness.
There should be no doubts about who will be covered by the Bill. My hon. Friend the Member for Hexham made the perfectly valid point that one or two people—the numbers are very small—might not be covered. I do not want at this point to investigate the status of Liechtenstein, interesting and unusual though it is, because we had a technical debate about that in Committee. The Bill applies only to the first two years of a driver's full licence. Secondly, even if a person residing in this country holds a licence from another Community country, he will exchange it for a British licence while residing here in Britain. So the only category of person not covered will be a visitor. And visitors, rightly or wrongly, are exempt from most of the provisions of the road traffic legislation. There is little point in prosecuting and going through the rigmarole of awarding penalty points to someone if, after enjoying his holiday here, he returns to a far distant country. In all those circumstances, we have accepted that the present arrangements are satisfactory for the overwhelming number of young people who qualify in this country, live in this country and will go on to be drivers in this country.
The most telling point was that made by one of my hon. Friends—forgive me, Mr. Deputy Speaker, but I cannot remember precisely which one—who said that what we are doing is establishing in the minds of young drivers an attitude towards driving, which, we hope, will stay with them for the rest of their lives.

Mr. Pickles: It was me.

Mr. Norris: It was indeed my hon. Friend—my good friend and parliamentary neighbour—the Member for Brentwood and Ongar who made that point.
This is an excellent measure. I commend my hon. Friend the Member for Rochford for the way in which he has piloted it through the House, despite the tremendous interest, which was equal on both sides of the House, and the complexity of the amendments that were tabled.
I commend the Bill to the House.

Dr. Michael Clark: With the leave of the House and with your permission, Mr. Deputy Speaker, I shall say a few words.
I thank everyone in the House for taking part in the debate. I would like to say a special word to the hon. Member for Stoke-on-Trent, North (Ms Walley), who,


because of another commitment, has had to leave the House. I was very pleased indeed to have the hon. Lady's support for the Bill throughout all its stages. I know that she was absent on Second Reading due to circumstances beyond her control, but I know that she cares passionately about road safety matters. She spoke about the second test probably being more difficult than the first, but said that it is something that we should have. That is a matter to which we can return.
I thank my hon. Friend the Minister for Transport in London for all his help throughout and for his support this morning. I am sure that such help is invaluable to a private Member's Bill.
If I may, I shall say a few words to my hon. Friend the Member for Hexham (Mr. Atkinson). Of course the AA and the RAC are organisations that want to protect motorists and their freedom, but they want to protect the freedom of the 95 per cent.—if not the 98 per cent.—of motorists who drive responsibly, and not that of the irresponsible 2 or 3 per cent. who drive badly. He asked several probing questions that were useful. I hope that he has received answers.
I now come to the hon. Member for Derbyshire, North-East (Mr. Barnes). I shall paraphrase—it is only fair that I do—a letter from a young disabled man in Sheffield who wrote to me. He noted that my name had come up recently due to my private Member's Bill. He told me that he looks forward to any legislation from the Government that will assist him as a disabled person. He told me that, as he became disabled as a result of a road traffic accident in 1988, he must encourage me and my Bill at every stage. He told me that if anyone writes to ask me to drop my Bill, I should put their letters in the waste paper basket. That is another side of various arguments.
I am delighted to see my hon. Friend the Member for Brentwood and Ongar (Mr. Pickles) in his place and not hurt overmuch by the terrible road accident that I know that he had. We all have family, friends or neighbours who have been hurt or killed in road accidents. It is important that we consider this as a road safety measure. I am sure that my hon. Friend was right when he said that people who are penalised under the provisions of the Bill will have their insurance premiums loaded. It is quite right and proper that they should.
Finally, I come to my hon. Friend the Member for Beckenham (Mr. Merchant), who has been so helpful throughout every stage of the Bill. I have just a minute to mention him. If I say nothing more, I thank my hon. Friend. He has taken an interest in road safety matters, and pointed out three aspects of road safety that are so important: alcohol, speed and inexperience. As he rightly said, the Bill will assist in preventing people with reckless inexperience from staying on the roads with a full licence. Some Bills are not a deterrent. My Bill is a deterrent. I commend it to the House.

Question put and agreed to.

Bill read the Third time, and passed.

Remaining Private Members' Bills

REFERENDUM BILL

Order for Second Reading read.

Question, That the Bill be now read a Second time, put and negatived.

TAMPONS (SAFETY) BILL

Order for Second Reading read.

Hon. Members: Object.

Second Reading deferred till Friday 14 July.

WAR CRIMES (SUPPLEMENTARY PROVISIONS) BILL [LORDS]

Order for Second Reading read.

Mr. Deputy Speaker (Mr. Michael Morris): Second Reading what day? No day named.

SCHOOL TRANSPORT SAFETY BILL

Order for Second Reading read.

Hon. Members: Object.

Second Reading deferred till Friday 14 July.

ANIMAL HEALTH (EUROPEAN LAW) BILL

Order for Second Reading read.

Mr. Deputy Speaker: Second Reading what day? No day named.

REGULATION OF DIET INDUSTRY BILL

Order read for resuming adjourned debate on Second Reading [31 March].

Hon. Members: Object.

Debate further adjourned till Friday 14 July.

BREAST CANCER (NATIONAL PLAN) BILL

Order for Second Reading read.

Hon. Members: Object.

Second Reading deferred till Friday 14 July.

WOMEN AND INFORMATION TECHNOLOGY BILL

Order for Second Reading read.

Hon. Members: Object.

Second Reading deferred till Friday 14 July.

SPORTS (DISCRIMINATION) (No. 2) BILL

Order for Second Reading read.

Hon. Members: Object.

Second Reading deferred till Friday 14 July.

MERCHANT SHIPPING (INQUIRIES AND INVESTIGATIONS) AMENDMENT BILL

Order for Second Reading read.

Hon. Members: Object.

Second Reading deferred till Friday 14 July.

TELEVISION SPORT (PUBLIC ACCESS) BILL

Order for Second Reading read.

Hon. Members: Object.

Second Reading deferred till Friday 14 July.

CIVIL RIGHTS (DISABLED PERSONS) (NORTHERN IRELAND) BILL

Order read for resuming adjourned debate on Second Reading [17 March].

Hon. Members: Object.

Debate further adjourned till Friday 14 July.

PENSIONS (DIVORCE) BILL

Order for Second Reading read.

Hon. Members: Object.

Second Reading deferred till Friday 14 July.

TRANSPORT OF ANIMALS FOR SLAUGHTER BILL

Order read for resuming adjourned debate on Second Reading [24 March].

Hon. Members: Object.

Debate further adjourned till Friday 14 July.

ENERGY-SAVING MATERIALS (RATE OF VALUE ADDED TAX) BILL

Order read for resuming adjourned debate on Second Reading [20 January].

Hon. Members: Object.

Debate further adjourned till Friday 14 July.

NATURAL DISASTERS (SCOTLAND) BILL

Order for Second Reading read.

Hon. Members: Object.

Second Reading deferred till Friday 14 July.

CIVIL RIGHTS (DISABLED PERSONS) (SCOTLAND) BILL

Order for Second Reading read.

Hon. Members: Object.

Second Reading deferred till Friday 14 July.

REQUIREMENTS OF WRITING (SCOTLAND) BILL [LORDS]

Read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Jenkin.]

Bill immediately considered in Committee; reported, without amendment.

Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 75 (Third Reading), and agreed to.

Bill accordingly read the Third time, and passed, without amendment.

CIVIL EVIDENCE (FAMILY MEDIATION) (SCOTLAND) BILL [LORDS]

Read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Connarty.]

Bill immediately considered in Committee; reported, without amendment.

Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 75 (Third Reading), and agreed to.

Bill accordingly read the Third time, and passed, without amendment.

PREVENTION OF FRAUD (REGISTRATION) BILL

Order for Second Reading read.

Mr. Deputy Speaker: Second Reading what day? No day named.

SITTINGS OF THE HOUSE

Ordered,
That, at the sitting on Friday 5th May, the Speaker shall adjourn the House, without Question put, immediately after Prayers.—[Mr. Liam Fox.]

Low-flying Military Aircraft

Motion made, and Question proposed, That this House do now adjourn.—[Dr. Liam Fox.]

Mr. Gordon Prentice: I welcome the opportunity to raise in this short debate a matter of great concern to my constituents—low-flying military aircraft. I want to talk specifically about the Tornado, one of the three fast jets flown by the Royal Air Force.
In one way or another, my constituents have long been associated with aviation. Tornado aircraft parts are manufactured in Pendle, and Rolls-Royce makes aeroplane engines in Barnoldswick in my constituency. Aviation is part and parcel of the region, but so too, unfortunately, is low flying. I pay tribute to the courage and skill of our pilots. So far as I have any criticism, it is not primarily directed at them.
Let me make my position clear at the outset. Low flying should not be allowed over built-up areas. I do not include here tiny hamlets. Low flying over towns and other populated areas should generally be prohibited. The Minister of State for the Armed Forces told me, last month I think, that towns listed for low level avoidance were generally those with 10,000 or more inhabitants, and that all other populated areas were to be avoided by military aircraft wherever possible.
That is not good enough. In my constituency, the two towns most affected are Barnoldswick, which has a population of just over 10,000, and Earby, which is half that size. My constituents in Earby probably see one or two aircraft a week flying overhead. Other villages such as Foulridge, just outside Colne, are also affected from time to time, but the incident that overshadowed all others happened on 30 January this year, when eight Tornadoes from RAF Bruggen in Germany flew very low over Barnoldswick and Earby.
That incident was widely reported in the local press. One of my constituents, Mr. Paul Howarth, of Alma avenue, Foulridge wrote to the Barnoldswick and Earby Times to say:
Living in Foulridge, I was one of the residents whose houses the RAF Tornados flew over during recent low flying night exercises.Mr. Pendle's Diary"—
an editorial or comment column in the local newspaper—
suggests that this must have been a terrifying experience for me and that I have a right to know who chose the route for the planes to fly on. On these two points I must disagree with Mr. Pendle. No, I did not find it a terrifying experience—not in the least—and secondly, I do not accept that I have a right to know who planned the route.
I presume the RAF, possibly in conjunction with NATO, planned the route and here I do agree with Mr. Pendle that flying over the outskirts of built up areas is an essential part of training for the defence of the United Kingdom.
Mr. Howarth then went on to criticise me on other matters in trenchant terms.
Not everyone, unfortunately, is made of such stern stuff as Mr. Howarth. I have passed the names of those affected by the low flying on 30 January to Lord Henley, the Under-Secretary of State for Defence. Those people will be interviewed in due course by RAF police. They will speak, for example, to Mrs. Whiteley of Albion street, Earby and to her son, Paul, who edits the local paper, "The Town Crier". That paper was inundated with calls

from local people. The RAF police will also want to interview Mr. Cliff Garnett of Gisburn road, Barnoldswick and Duncan Smith, a reporter on the Craven Herald and Pioneer, who happens to live in Earby.
Duncan Smith saw the jets at first hand, and he described the experience for that newspaper in the following terms:
I was just leaving the house to take my dog for a walk when I heard the first formation approaching and as they came over, they did seem very low, very fast and very loud. I certainly checked the house roof to see if the tiles were still on!
But the second formation took me completely by surprise. By then I was near the Station Hotel and directly under the flight path. The first I knew was when the lead jet soared above me, and the noise was incredible. It felt like being inside an explosion, like a volley of cannon fire exploding right above my head.
Before I knew it, I was virtually crouching on the ground, having instinctively ducked low, and my heart was pounding. My dog was frantically pulling at the lead, obviously very scared. I watched the remaining jets fly over, still ducking instinctively each time at the noise.
I wouldn't like to say how low they were, but I have never known them that low before and, having passed over the town, they seemed to pull up to clear Earby moor.
With hindsight it was quite exciting. But in all honesty, if I'd been elderly, of a nervous disposition or with a weak heart I might not be here now to write this.
A thousand questions spring to mind after reading that account. What about safety? Do we need low flying, and what is its purpose in the post-cold war world? The whole business of low flying is phenomenally expensive. It cost £177,000 for those eight Tornados to come here from their base in Germany. The local paper carried the headline:
£117,000 for night out in West Craven",
and described that sum as "staggering".
I hope that the Minister does not bridle too much if I mention that, while that overflight took place, a debate was raging on the ground about cuts to the education budget and how they will affect West Craven high school in Barnoldswick. That £117,000 would be an absolute godsend to that school. People make such connections.
No one would want the country to be left without air defences, but is all low flying necessary? If it is absolutely necessary, why are people not warned beforehand? The Minister has told me that it would be impracticable to provide prior notice of all low-level sorties to Members of Parliament, but surely a flight of eight Tornados is worthy of a brief note to me.
My constituents also want to know why we do not use other, less densely populated countries for low flying, if it is needed. Why do we not make more use of Goose bay in Labrador, or of areas in central and eastern Europe where countries are crying out for hard currency, instead of inflicting this scourge on heavily populated areas such as Pendle and the north of England generally?
I have had the benefit of reading the seventh report by the Select Committee on Defence, which was published in July last year, and the Government's response to it. I do not have time to deal with all the issues raised in the report, but I want to touch on a few. I mentioned that I wanted low flying to be banned for safety reasons. I do not want to be alarmist, but I must tell the Minister that the Station hotel, where Duncan Smith had his frightening


experience, is only 300 or 400 yards from Earby county primary school. That is the blink of an eyelid for the pilot of a fast jet which is streaking across the sky.
I was reminded of the tragic incident in September last year when two RAF airmen died when their Tornado crashed into a hillside in Perthshire. It was the fifth Tornado crash in 1994. A report in The Herald on the following day, 2 September, quoted a Lochearnhead schoolteacher who said that low-flying aircraft often passed over her school. She said:
This plane crash was within half a second (travelling time) of this playground with 16 children in it.
That incident prompted my hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) to call for a suspension of all military low flying until the cause of the crash became clear. He said—he was not being alarmist, either—that it was only a matter of time before there was a "Lockerbie-style" incident involving low-flying jets crashing into populated areas.
I have read about the ALFENS project, the new notification procedure which is supposed to improve safety. From my reading of the Defence Committee report, it is clear that it is scandalous that the project is running years late. I hope that the Minister can tell me whether the project is likely to come on stream this year as promised.
The Minister also told me in answer to a parliamentary question last month that 27 Tornado aircraft had crashed while on exercise over United Kingdom land and sea. The idea that we might witness an aircraft crashing in a populated area is not fanciful. I was told that 17 aircraft had crashed on land—mercifully, none into a built-up area. Tragically, 17 RAF personnel and two civilians were killed in the crashes. A further 15 Tornado aircraft have been lost overseas; six were lost in combat over the Gulf, another six as a result of air crew error and three others as a result of mechanical or similar failure.
Leaving aside the human cost, the total cost of all the crashes is close to £1 billion. The Library tells me that, at 1994 prices, the cost of a Tornado aircraft is an astonishing £28 million, so the crashes in the United Kingdom since 1981 have cost £644 million, and those overseas have cost £345 million. It seems to me as a layperson that it is self-evident that flying at very low altitudes will increase the risk of something going wrong.
I know that the normal minimum height for low flying in the United Kingdom is 250 ft. Operational low flying is allowed down to 100 ft. Planes are literally skimming across the treetops in three tactical training areas: in the north of Scotland, just north of the Great Glen, in the borders and in central Wales. It is not surprising that shoals of complaints are generated when planes travel at such altitudes.
Last year, there were 5,778 complaints, which had risen from 5,738 the year before. I am absolutely convinced that those figures do not convey the real number of complaints. People generally do not know who to complain to, other than their Member of Parliament, if they see a warplane streaking overhead and disappearing over the horizon. They tend just to shrug their shoulders and get on with life. Most people have not even heard of the Royal Air Force police.
To illustrate the point, only a few days ago I was speaking to another constituent of mine, Jim Skinner, who lives in Manchester road, Barnoldswick. I mentioned to

him in passing that I was raising this important issue in the House, and he told me, completely unprompted, that at 11 o'clock—I hope that the Minister will want to take note—on Friday 21 April, another Tornado had screamed up Manchester road at a height of 300 ft before disappearing over the horizon.
Our planes fly at lower altitudes than those of all other NATO countries. Does that necessarily produce better results? Malcolm Spaven of the International Security Information Service made some constructive points when he told the Select Committee on Defence:
It has been argued that the more frequently aircrew fly, the better their flight safety record. On that basis, one would expect the RAF to have a lower accident rate for its fast jets than similar types in other NATO air forces. If this was the case, then it could be put forward as a justification for the expense of additional flying effort, since it would have a pay-off in the husbanding of expensive combat aircraft resources and of aircrew trained at great expense. However, the reverse is true. Consistently throughout the 1980s and until 1992, the RAF's combat fast jets have had an accidental loss rate twice that of their US Air Force equivalents.
Mr. Spaven went on to talk about the RAF's predilection for very low flying and of the experience of the Gulf war. He said:
One lesson learned from the Gulf War was that the RAF's hitherto exclusive concentration on low level attack was insufficiently flexible. The rapid switch of air-to-ground operations from low level to the medium level airspace was carried over to some extent into post-Gulf War training.
Mr. Spaven also said that medium-level training is very much regarded—even now—as a secondary option by the RAF. In effect, that means that, for the foreseeable future, we have to suffer increased very low flying in my area.
When my hon. Friend the Member for Carrick, Cumnock and Doon Valley commented in September, he said that the Minister of Defence had broken a promise made in 1991 to cut the number of low-level flights by 30 per cent. He said then that the real fall was nearer to 3 per cent., mostly due to the reduced number of flights by the United States Air Force. Will the Minister comment on that?
Is not increased activity being inflicted on us in Britain because of the decision by the Germans to ban low-level flights over Germany, for environmental and other reasons? Royal Air Force planes, such as the eight Tornados which came from RAF Bruggen, spend useless hours travelling so that they may fly at low level for 30 or 40 minutes in the north of England, before flying back to their home base.
I would like the Minister to address the point that I made earlier about alternative areas in which low flying can take place if it is deemed to be absolutely essential. I am not the only person who wants answers from the Minister but many hundreds of my constituents, who are regularly inconvenienced, frightened and alarmed by low-flying jets screeching over the areas in which they live.

The Minister of State for the Armed Forces (Mr. Nicholas Soames): I am grateful for the opportunity to reply to this Adjournment debate, and will try to deal with a number of the points made by the hon. Member for Pendle (Mr. Prentice) in the time that he has left me.
I will explain why low flying remains essential, where the activity is carried out, and how it is controlled and monitored. While the prospects of a major conflict in


Europe may have receded with the end of the cold war, instability and unpredictability have increased. Events around the world have demonstrated a continuing requirement for well-trained, well-equipped armed forces that will be able to defend our interests whenever and wherever the need arises. Clearly, the ability to fly low remains a vital element in meeting that requirement, and an important reason for low-flying training.
Many nations possess modern, capable air defence systems. Wherever our armed forces are likely to conduct flying operations, we must and will be prepared for them to be opposed by air defences supported by a comprehensive network of surveillance radars and command and control systems. As such systems rely heavily on radar information, low flying is a vital tactic to minimise exposure to those defences.
Attacking aircraft can use natural land features to mask their approach, but to press home their attack and to be successful, they must fly at high speeds and at heights of 100 ft and below. Such skills cannot be learned quickly. Nor can they be maintained without regular, rigorous and realistic training. It is essential that air crews achieve and maintain a high standard of proficiency in peacetime.
We must never—and will never—send air crews into action in hostile operating environments without first training them to the highest levels. The hon. Gentleman will understand that we would never wish to put the lives of air crew at risk in that way. Regular low flying remains essential to meet our defence commitments.
In an ideal world, we would train without causing any disturbance to those on the ground. Maximum use is made of simulators, but even the most advanced technology cannot be a substitute for low flying. Unfortunately, there are no uninhabited areas in the United Kingdom large enough to accommodate our training needs, so we aim at spreading the activity across the United Kingdom as widely as possible, to reduce the burden in any one area.
Certain areas are excluded, such as civil aerodromes, major industrial hazards and large centres of population—generally, towns with 10,000 or more inhabitants, such as Barnoldswick. In addition, air crews do their best to avoid all populated areas, whether or not they are listed for avoidance.
It is not always possible to avoid the outskirts of towns and communities, and people living on the outskirts of major towns, as well as in less populated areas, will see and hear aircraft from time to time. To minimise disturbance, we limit the amount of low-flying training to that which is strictly essential. Since 1988, we have reduced the volume of low flying by jet aircraft by more than 30 per cent., and are committed to maintaining that reduction.
Night training is fundamental, but we keep it to the minimum for air crew to acquire and maintain the required skills. We also aim to complete training as early as possible, and before 11 pm whenever possible. Low flying by fast jets is rarely permitted after that time. The longer hours of darkness in the winter months allow sorties to be flown earlier in the evening, as was the case with the sortie that involved the flying in the vicinity of Barnoldswick and Earby on 30 January, to which the hon. Gentleman referred.
We recognise that the general public have a right to be assured that low flying is conducted safely and responsibly. I emphasise that our pilots are subject to stringent flying regulations. Their performance is closely monitored, to ensure that the standards of airmanship, so vital to our operational capabilities, are kept to the highest level. They are brave, skilled and dedicated people—some of the best fast jet pilots in the world.
We take seriously all complaints about low flying, and those that suggest a breach of regulations are investigated by the Royal Air Force police. The RAF police also carry out regular covert monitoring operations, sometimes assisted by a Skyguard radar system, which measures accurately the altitude and speed of an aircraft.
I am pleased to be able to assure the hon. Gentleman that those checks have consistently shown that, rightly, there is a healthy respect for the regulations. That is not to say that breaches never occur, but such cases are very much the exception; flouting of the rules is not tolerated, and action is taken when breaches are substantiated.
I emphasise that flight safety is at the heart of our flying regulations and operating procedures. All military aircraft accidents are investigated thoroughly, and any lessons learned are put into effect as a matter of priority. We ensure that our findings are publicised widely, not only among military allies but throughout the aviation world, and summaries of all those boards of inquiries are placed in the Library of the House.
Although there has been a downward trend in the overall RAF accident rate recently, we are certainly not complacent. A range of safety measures is being progressively introduced to improve deconfliction and conspicuity in the lower air space. In addition, my Department has regular discussions with the Civil Aviation Authority and other civil agencies about a wide range of safety issues. Of course, no flying activity is entirely risk-free, but the risks need to be kept in perspective.
As the hon. Gentleman mentioned, taking his line from the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes), who is perhaps the last master of the understatement in the House of Commons, the flying safety record of the Tornado compares extremely favourably with all other fast jet types. The number of losses since the Tornado entered service in 1981 is well within the expected attrition rate.
I shall now discuss the incident on 30 January 1995. As the hon. Gentleman is aware, investigations by the Royal Air Force police continue. Those have so far established details of the sortie and of its planned route through the Barnoldswick and Earby district. It has not, however, yet been possible to determine the precise route followed by the aircraft, and especially whether any of them overflew the centre of Barnoldswick, which, as I said, is listed for avoidance. It is therefore necessary to speak to witnesses of the incident.
I am grateful to the hon. Gentleman for finally providing—after three attempts on our part to obtain those from him—the names and addresses of those of his constituents who are willing to be interviewed by the RAF police, a matter in which he has proved to be dilatory. Those interviews will now be conducted as soon as possible, and we expect the investigation to be completed shortly afterwards.
Having read the coverage in the local newspaper, I have read the gross exaggerations that the hon. Gentleman used in describing the flight, and the stricture that has been administered to him in a leading article in the same newspaper.

Mr. Prentice: Will the Minister give way?

Mr. Soames: No; I will not.
My noble Friend the Under-Secretary of State for Defence will then write to the hon. Gentleman setting out the conclusions that have been drawn.
The sortie concerned was a routine training sortie by eight Tornado GR1 aircraft of No. 9 squadron, based at RAF Bruggen. It was intended to simulate a typical attack mission involving the penetration of a highly hostile air space at low level, under cover of darkness—not a mission that would be lightly flown.
After carrying out a simulated low-level attack on a target in the lake district, the aircraft were transiting at low level to carry out a further attack on the range at RAF Wainfleet when they flew through the hon. Gentleman's constituency. The aircraft were authorised to fly down to 500 ft minimum separation distance; that is to say, they were required to maintain a distance of at least 500 ft from all objects, including the ground. They were making use of terrain-following radar, which maintains a fixed separation from the ground and allows the aircraft to be flown safely at low level at night.
The planned route of the aircraft involved a turn from a south-easterly to a southerly heading slightly to the east of Barnoldswick; the aircraft should therefore have passed between Barnoldswick and Earby. As I have said, it has not yet been determined whether any of the aircraft deviated from that route. Because the sortie was being flown at night it was arranged in accordance with the rules of the United Kingdom night low-flying system. Those are specifically designed to minimise the risk of mid-air collisions between aircraft.
The country is divided into a number of night-flying sectors, with only one squadron or unit allowed access to any sector at any one time. That squadron is then responsible for ensuring safe separation between its own aircraft. That is often achieved by all the aircraft involved flying the same route, with time gaps between them, which is what was done on this occasion.
The eight aircraft involved were split into two groups of four. A 40-second gap was maintained between the aircraft in each group, and a three-minute gap between the two groups. I appreciate that flying in stream in that way, which would not generally be done in daylight, increases the disturbance experienced by those who live close to the route, but I hope that the hon. Gentleman will understand the overriding safety considerations which make that necessary. Air crew do, of course, seek to vary as far as possible the routes chosen from day to day.
I hope that what I have said has shown that, in planning and carrying out this essential training, due regard is given to safety and to minimising disturbance to the general public. Unfortunately, it is not possible to avoid disturbance completely, and I apologise to the hon. Gentleman's constituents who were affected by our training on 30 January, although I think that the hon. Gentleman exaggerates the concern.
I believe that we have the best air force in the world. Its deservedly high reputation owes much to the disciplined and thorough training and professionalism of its air crews. I note with pride that, already this year, every type of front-line aircraft in the Royal Air Force has been deployed or is deployed on operations around the world. Their ability to contribute so effectively to our security owes a great deal to the training which our air crews carry out at home. We are most grateful to the millions of people who have supported us in that training for more than 75 years.

Question put and agreed to.

Adjourned accordingly at six minutes past Three o'clock.